THE EMPLOYEE SHARE OPTION PLAN - DETAIL

The Employee Share Option Plan is similar to the plan prepared for the Department of Employment and Workplace Relations, referred to as the Deferred Option Plan.

The concept involves the establishment of a special purpose employee option contract ESOP. The Employer makes tax deductible contributions to the Plan Trustee to enable the Trustee to purchase the options from the Employer at their value determined by the RSG Employee Equity Valuation Calculator. The ESOP options are purchased by the Trustee and allocated to participating Employees, on the instructions of the Employer on the basis of terms of issue stipulated by the Employer’s Board of Directors.

The options are usually issued with vesting conditions and/or performance measures. These vesting conditions and terms of issue should be consistent with the Employer’s long-term incentive-based remuneration strategies which underpin the offer of participation in the ESOP.

Vested options can be cancelled for a cancellation payment, if the Employer does not wish the options to be exercised into shares.

Because ESOP Share Options can be “cashed out” effectively, without requiring the issue of shares, the ESOP is an ideal vehicle to deliver cash-based long-term incentives to key employees.