2016 EMPLOYEE SHARE OPTION PLAN - EXPLANATORY BOOKLET and FAQs
Introduction
The Land Securities 2015 Employee Share Option Plan (“Plan”) is designed to provide longer term incentives to selected employees and provide them with the opportunity to acquire Land Securities Group PLC Ordinary shares (“Landsec Shares”) on potentially favourable terms, normally subject to the condition that the participant must remain in continuous employment with Landsec for at least three years from grant.
This booklet is designed to explain the key features of the Plan.Additional information and any updates will be made available on Landlink. You can also find out general information about Landsec at LandsecShares are listed on the London Stock Exchange.
The Plan replaced the 2005 Executive Share Option Plan (“2005 Plan”) with the first grants being made in 2015. Any options you hold under the 2005 Plan will continue as before, but any new awards will be made under this new 2015 Plan.
The Plan Rules are available from Company Secretariat. The Rules and the relevant legislation will prevail if there is any conflict withthis booklet.
You are advised to read this booklet carefully.
What is an option?
Options granted under the Plan give the participant the right to buy shares between threeand ten years from its grant at the option price, subject to continuing employment. The option price is derived from the market value of the shares shortly before the option is granted.Two types of option can be granted under the Plan:
Part A - Tax Favoured Plan (‘Approved Options’)
Approved Options qualify for income tax and National Insurance Contribution (“NIC”) relief on exercise. This means that while you do need to still pay the total option price to the Company (i.e. number of shares you wish to exercise x the option price per share), there is usually no income tax or national insurance to pay. Holdings of Approved Options are limited under HMRC rules to a total value of £30,000 per individual at any one time. Any options granted above this limit will automatically be classed as Unapproved Options.
Part B – Non-Tax Favoured Plan (‘Unapproved Options’)
Unapproved Options do not qualify for favourable tax treatment. Therefore, income tax (at your marginal rate) and NIC will be payable immediately on exercise, together with the total exercise price (i.e. the number of shares you wish to exercise x the option price per share).
Who can participate in the Plan?
The Remuneration Committee approves which employees will receive options inthat particular grant. The awards are discretionary to selected employees. Grants usually occur in late June or early July of each year after the announcement of Landsec’s annual results.
How many shares will I receive?
The Remuneration Committee approves the total value that you will receive options over. The number of options is then calculated based on the price of Landsec Shares shortly before the grant and will be setout in your option certificate.
When can my option be exercised?
No performance conditions (save for continued employment) attach to this award.
An option is normally exercisable from the third anniversary of the date of grant (often called the vest date) until the end of the period of ten years beginning with its grant date. We will write and confirm when your option is exercisable.
Some employees are subject to the Company’s Share Dealing Code, and this restricts when
options can be exercised and when any shares that are acquired may be sold. Further details on this will be provided once the options have vested.
Do I have to pay anythingfor an option?
No payment is required for the grant of an option under the Plan. However, when you exercise your share options you will be required to pay the option price and any applicable tax. More information about the exercise process will be provided once the options have vested.
What share rights do I have as an option holder?
You don’t have any share rights as an option holder. However if you exercise your options and keep the shares you will become a shareholder with the right to vote at general meetings and the AGM and to receive dividends.
What happens if I leaveLandsecvoluntarily?
Any option you hold will lapse if you resign or otherwise leave voluntarily.
What happens if I leaveLandsecfor other reasons?
You will be deemed a ‘Good Leaver’ if you cease to be an employee of the Group because of
death
injury or disability
redundancy
retirement
your office or employment being with a company or business that ceases to be part of the Group
In the case of your death, your personal representatives will normally have 12 months to exercise from that date.
If you are a Good Leaver in all other circumstances, your Options will normally be exercisable as follows:
- Vested Options (those granted more than three years ago), both Approved or Unapproved, will normally become exercisable for a period of six months from the date you leave, after which they will lapse.
- Unvested Options(those granted less than three years ago), both Approved and Unapproved, will be pro-rated for time as per the example below:
You have 500 options granted on 26 June 2017 and leave the company as a good leaver on 29October 2018. You would be entitled to exercise 222 options (16/36 x 500) - 16 being your complete number months from the date of grant to date of leaving and 36 being the number of months from date of grant to date of normal vest.
- Unvested, Approved Options will be exercisable for 6 months from the date of leaving;
- Unvested, Unapproved Options will be exercisable for 42 months from the date of grant.
If you leave employment other than as a Good Leaver – that is, if you resign or are dismissed - your options will immediately lapse.
What if the Companyis taken over?
If the Company is taken over, other than in the circumstances of an internal reorganisation, you
will be notified and your options will be exercisable for a short period. We will give you detailed
information if this scenario arises.
How would my options beaffected by variations in theshare capital of the Company?
In the event that there is a variation in the share capital of the Company or a de-merger, special
dividend or other similar event affecting the market price of shares the number of shares subject
to an option may be adjusted as the Remuneration Committee considers appropriate.
Can the Plan be amended?
The Remuneration Committee may amend the rules of the Plan but any amendment to
the material disadvantage of existing participants must be approved by the majority of
those affected.
What are the tax consequencesof an option?
The UK tax consequences of participation in the Plan are dependent on whether you have been awarded Approved or Unapproved options. There are no tax consequences on the grant of your option.
Approved Options qualify for tax and National Insurance relief on exercise. This means that usually no tax and national insurance is payable on exercise. Unapproved Options do not qualify for favourable tax treatment. Therefore, tax and national insurance will be payable on exercise.
You may have to pay Capital Gains Tax when you sell the shares. More information on capital gains tax can be found on the HMRC website
A more detailed tax guidance note will be issued on the vest of your options.
General Queries
If you have any other queries please contact:
Tim Ashby, Group Company Secretary on 0207 024 5256 ()
Louise Miller, Senior Assistant Company Secretary: 0207 024 5257 ()
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