Malus Definition

GLOSSARY

Published by a ��Ƶ Share Incentives expert

What does Malus mean?

Malus is an additional hurdle to the vesting of a share incentive award under which, if a material adverse event takes place, the company can reduce or extinguish the amount the awardholder may otherwise receive under that award. For further information.

View the related practice notes about Malus

AIFMD—Remuneration Code

AIFMD—Remuneration Code This Practice Note explores the remuneration measures introduced by the Alternative Investment Fund Managers Directive 2011/61/EU (AIFMD) and implemented through the AIFM Remuneration Code in SYSC 19B of the FCA Handbook. This Practice Note explains key provisions in relation to remuneration, what is classified as remuneration and how the remuneration requirements impact senior staff and the practical implications for alternative investment firms. It will also explore how the remuneration provisions have been designed with effective risk management in mind, the concept of proportionality, disclosure requirements, the distinction between fixed and variable remuneration, such as claw back and performance related features and remuneration requirements which apply when an AIFM delegates portfolio management or risk management activities to a third party. Managers of alternative investments funds including; hedge funds, private equity funds and other AIFs (such as commodity funds venture capital funds, real estate funds and investment funds) are all potentially within scope of the remuneration requirements. What is the AIFMD? The AIFMD (Directive 2011/61/EU) covers the management,...

Settlement agreements in employment—practical and tax issues

Settlement agreements in employment—practical and tax issues This Practice Note examines the practical issues that typically arise relating to an employment settlement agreement (formerly known as a compromise agreement). It also outlines the tax issues that are likely to be relevant, and refers to our related Practice Notes for further detail. For information on the legal requirements (ie the conditions regulating settlement agreements) that must be met in order for a settlement agreement to be binding and valid to settle statutory employment claims, see Practice Note: Settlement agreements in employment—legal requirements. Parties to the agreement In the case of an individual employer, or a company employer with a simple corporate structure, the employer and the employee will be the parties to the settlement agreement and there will be no need to refer to third parties. However, it may be that the identity of the employer is not straightforward, eg in a more complex corporate structure where: • the employee works, or has worked, for other companies in...

Discover our 43 Practice Notes on Malus

LTIP — notice of exercise of option

LTIP — notice of exercise of option The Company Secretary [insert date] [insert name of company that granted the option] (Company) [[insert address of company that granted the option]] Form of notice of exercise From: [insert name of option holder] 1 Exercise of the Option I refer to the option granted to me on [insert date on which the share option was originally granted] over [insert class and nominal value of shares under option] shares in the Company (Shares) under the terms of the [insert name of LTIP under which option was granted] (Plan) (Option), and hereby give notice that I am exercising the Option in respect of [insert number of shares being exercised] Shares at the exercise price of £[insert exercise price per share as in the original grant documentation] per Share (Option Price) and request the allotment or transfer to me of those Shares in accordance with the Plan and the Memorandum and Articles of Association of the Company. I request that you...

Umbrella LTIP rules

Umbrella LTIP rules PART ONE—GENERAL PROVISIONS 1 Definitions and interpretations 1.1 Definitions Annual Bonus • means in respect of a particular Financial Year the annual bonus paid or payable to the Eligible Employee for that Financial Year as a result of the Eligible Employee’s participation in an annual cash bonus plan, scheme or arrangement operated by any member of the Group; Associated Company • means in relation to the Company: (a) any company which has Control of the Company; and (b) any company which is under the Control of any company referred to in (a) above; Award • means a Contingent Award, a Restricted Award, a Matched Award, an Option or a Cash Award; Board • means the board of directors of the Company or a duly authorised committee of it, which may include the Remuneration Committee; Cash Award • means a right to receive a payment in cash which is calculated by reference to the Market Value of a number of Shares and which has been granted or...

Dive into our 3 Precedents related to Malus

What happens to restricted stock units or stock options that have vested during an employee's notice period (assuming the employee is still employed at the vesting date)?

What happens to restricted stock units or stock options that have vested during an employee's notice period (assuming the employee is still employed at the vesting date)? The treatment of restricted stock units or stock options on cessation of employment (or, if earlier, on the giving or receiving of notice) is a contractual issue and the share award documentation will need to be examined and reviewed to be able to answer this question. It is uncommon for restricted share agreements or share option agreements to not specify what happens to the award on cessation of employment of the award holder. Generally restricted stock units or stock options will be drafted to either be forfeited or to lapse (as appropriate) on the actual cessation of employment or, in some case, if earlier, the giving or receiving of notice of cessation of

Would it be normal to have a 'malus and clawback' provision in a save as you earn (SAYE) scheme of a Financial Conduct Authority regulated listed company?

Would it be normal to have a 'malus and clawback' provision in a save as you earn (SAYE) scheme of a Financial Conduct Authority regulated listed company? Corporate governance best practice at present is that 'malus and clawback' are only relevant to awards held by senior management and other executives who are 'material risk takers'. Therefore, malus and clawback provisions tend only to be included in executive or discretionary share incentive plans, and are not usually applied in relation to all-employee arrangements (such as save as you earn (SAYE) schemes). Looking at SAYE schemes specifically, there is nothing in the SAYE legislation which expressly prevents an SAYE option from being subject to malus or clawback. However, we are aware that HM Revenue & Customs (HMRC) has previously not accepted malus or clawback provisions in SAYE schemes. Therefore, any inclusion of a malus or clawback provision within the SAYE scheme rules themselves should only be made after discussing with HMRC whether this will impact on the scheme’s...

See the 4 Q&As about Malus

Updated Investment Association Principles of Remuneration—analysis of key changes

Share Incentives analysis: On 9 October 2024, the Investment Association (IA) published its updated Principles of Remuneration, setting out its members’ views in relation to remuneration and the manner in which it should be determined and structured. The IA has said that its goal was to simplify its guidelines, in the context of a long-running debate about the role of executive pay and approaches to it in supporting the competitiveness of the UK economy. This News Analysis examines the key changes made to the Principles.

Share Incentives weekly highlights—29 February 2024

This week's edition of Share Incentives weekly highlights includes: (1) an update from the IA regarding its Principles of Remuneration and a letter that it has sent to FTSE 350 remuneration committee chairs and (2) the FRC’s announcement that it intends to review the UK Stewardship Code 2020.

Read the latest 125 News articles on Malus

Speed up all aspects of your legal work with tools that help you to work faster and smarter. Win cases, close deals and grow your business–all whilst saving time and reducing risk.

Case studies

"We rely on ��Ƶ to give us a definitive answer, quickly and reliable every time so that we can be confident in the advice we use to help our clients."

Shelter

Access all documents on Malus

GET ACCESS NOW

Top

Trial

��Ƶ

GLOSSARY