Case study: Enterprise Management Incentive (EMI) options for key employees

Case study takeaways:

  • Our client is a platform designed to support ecommerce growth.
  • haysmacintyre assisted with structuring equity remuneration packages for key employees.
  • The incentive package was agreed utilising available tax advantages and within the client’s timeframe.

The challenge

Our client wished to offer equity incentives to its key employees. Enterprise Management Incentive (EMI) options were identified as the most appropriate mechanism. However, the CEO was already very close to the £250k EMI limit, which would prevent them from being granted any further EMI options. This would mean any further options would be ‘unapproved’ options and taxed at far higher rates.

The solution

haysmacintyre identified that the CEO’s EMI options could be restructured by cancelling a small percentage of them and replacing with a larger number of options over lower value classes of hurdle share.

The classes of hurdle share have the same upside potential as the existing share class but are arguably of far lower value.

Although pay-outs are dependent on the business being sold for a certain value threshold, hurdle shares means that employees are incentivised to work for the growth of the company and share in the increase in its value since they will reap the financial benefits.

haysmacintyre collaborated with our client and its lawyers to design the rights of three separate classes hurdle shares and valued these for EMI purposes.

The result

haysmacintyre managed to agree all three valuations with HMRC on the first attempt, within two weeks of submission. This allowed our client to implement the exact option structure that had been planned, within the desired timeframe.

What our client had to say:

“From my perspective, every interaction with you and your team has been very professional and insightful. You suggested alternatives and different options for us that would most suit our very specific and complex needs! I was also very impressed with the turnaround times and grateful I didn’t need to chase for things (which seems to be the norm for most legal and tax service providers). Would highly recommend and hope to use you again in the future, with this business or the next.”

Director of Finance & Operations


If you would like to discuss how haysmacintyre can help you in structuring employee equity awards, please contact David Bareham or your regular haysmacintyre contact.

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