Employee Share Schemes: Glossary

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Company Share Option Plan (CSOP) An option scheme providing income tax advantages for UK employees working for independent companies. CSOP must comply with the current legislation and options must be notified to HM Revenue and Customs); also known as Tax-Advantaged Options. For more information see our CSOP page.
Deferred Payment Shares See Nil Paid Shares.
EMI Option Plan See Enterprise Management Incentives Option Scheme.
EMI Options  See Enterprise Management Incentives Option Scheme.
EMI Share Options  See Enterprise Management Incentives Option Scheme.
Employee Benefit Trust (EBT) A discretionary trust for the benefit of employees of a particular company or group of companies. Also abbreviated to EBT or called employees’ trust, employee trust, employees’ share trust, employee share ownership trust or ESOT.
Employee Ownership A form of company ownership under which the employees as a whole own the whole company or a majority of it (or in some cases a significant but not controlling stake).
Employee Ownership Trust (EOT) A particular form of employee benefit trust which has a controlling interest in a business and which satisfies the conditions for tax reliefs for employee-owned businesses introduced by Finance Act 2014.
Employee Share Ownership Plan (ESOP) A generic term describing any kind of employee share plan or employee share scheme; also used to describe an arrangement involving an employee benefit trust.
Employee-owned company A company the whole or the majority of which is owned on behalf of the employees, normally on a widespread basis so that all or most staff have a stake in their company.
Employee Share Ownership Trust See Employee Benefit Trust.
Employee Share Trust See Employee Benefit Trust.
Employees Trust See Employee Benefit Trust.
Enterprise Management Incentives (EMI) Option Scheme An option scheme providing income tax advantages for UK employees working for smaller qualifying and independent companies, also known as EMI option plan, EMI share option. For more information see our EMI page.
ESOT Employees Share Ownership Trust. See Employee Benefit Trust.
Growth Shares Shares of a special class which only acquire a capital value if the value of the whole company exceeds a specified threshold. For more information see our Growth Shares page. Hurdle Shares are similar.
Joint Share Ownership Plan (JSOP) Describes an arrangement under which shares are jointly acquired by an employee and an employee benefit trust. The value of the trust’s interest in the shares is normally fixed at the same level as the value of the shares when they are acquired, whereas the value of the employee’s interest is based on any growth in value of the shares after their acquisition.
Joint Venture A business which is jointly owned by two companies or groups, pooling their expertise.
Limited Company A separate legal entity which has its own legal personality. It confers on its owners (shareholders) limited liability, so that they are not personally liable to the company’s creditors.
Limited Liability Partnership A form of partnership in which members have limited liability, so that – unlike a conventional partnership – no member is liable for the obligations created by their fellow members.
Long Term Incentive Plan (LTIP) Normally a form of option scheme which is not tax-advantaged, in which options are granted with an exercise price of zero but may only be exercised if a performance target is achieved. For further information see our Unapproved Options and Long Term Incentive Plans page.
Nil Paid Shares Describes an arrangement under which an employee acquires shares at the outset but doesn’t have to pay for them immediately. Also similar to partly-paid shares or deferred payment shares.
Non tax-advantaged Options Employee shares option which (unlike EMI options, CSOP options and SAYE options) do not provide participants with income tax advantages. For more information see our Unapproved Options and Long Term Incentive Plans page.
Partly Paid Shares See Nil Paid Shares.
Restricted Shares Shares which are subject to initial restrictions affecting their value, such as absence of voting rights, or being subject to forfeiture if the employee leaves within a specified period. These restrictions may fall away after that period has passed.
Save As You Earn Options See SAYE Option Scheme.
SAYE Option Scheme A UK tax-advantaged option scheme under which options may be granted to all employees of an independent company. Employees must agree to save a fixed monthly or weekly amount which at the end of the option period they may either use to exercise their options or simply withdraw. Also known as Sharesave and Save As You Earn options. For more information see our SAYE page.
Share Incentive Plan (SIP) A UK tax-advantaged scheme for providing employee shares enabling employees to purchase shares (partnership shares) out of gross pay or receive free shares free of income tax and National Insurance. Shares must be offered to all eligible employees. For more information see our SIP page
Sharesave See SAYE Option Scheme.
Tax-Advantaged Options See Company Share Option Plan (CSOP), Enterprise Management Incentives (EMI) Option Scheme, SAYE Option Scheme.
Unapproved Options See Non tax-advantaged Options.

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