THE OPTION SHARE TRUST

The concept involves the establishment of a special purpose Option Share Trust (OST). The OST receives contributions and purchases Options to Shares in the Employer Company. Those Options to Shares are to be held for the benefit of Participating Employees. Employees are in turn issued with units in the trust, to which the Options have been allocated.  The deed and the particular terms of issue of the Share Units govern their entitlements to the share benefits.

Share Units may or may not be issued with vesting conditions, based on time and/or performance measures. These terms of issue should be consistent with the Employer’s particular remuneration strategies, underpinning the offer of participation in the OST.

When the vesting conditions (and performance hurdles) have been met, the Options are able to be exercised into shares through the OST.

EMPLOYER TYPE

• Private Companies.
• Public Companies.

STRATEGY

• Retention Strategy.
• Effective Share acquisition.
• Succession Planning.

ADVANTAGES

• Allows controlled access to share benefits to meet incentive/remuneration criteria.
• Employees are not lumbered with confusing section 139E election decisions.
• Funding is made by the Employer as contributions or loans expensed in its accounts.
• Allows shares to be bundled and warehoused in the OST.
• Distributes franked dividend income (if any).
• Controls Employee downside risk exposure.
• Allows for taxation only to be paid once the Shares are sold.
• Provides owner/shareholder full control over who participates, for how much and for how long.
• Fully outsourced administration.