EMI Options Rules: Good or Bad Leaver?

[Toddish]

Hi there

First time poster here. Really hoping you can help.

I have a question about whether handing in my resignation would classify me as a 'good leaver' or 'bad leaver' based on the wording in my options rules. And whether I would be entitled to any of my options if I were to leave.

I'll try to give as much detail as possible.

Imagined Scenario
I hand in my notice. Nothing bad has happened. The relationship between myself and the company is good. I just fancy a change in career direction and feel like I need to leave the company in order to do that.

Current Options Status
2% of my shares have vested. the remaining 0.5% are vesting monthly for the next 24 months.

Options Rules - Definitions
Good Leaver: any director or any employee of any Group Company who ceases to be a director or employee without becoming a director or employee of any other Group Company by reason of injury, disability, redundancy or early retirement with the agreement of the Company or in any other circumstance where the Directors, in their discretion, determine the director or employee to be a Good Leaver'

Bad Leaver: any director or employee of any Group Company who ceases to be a director or employee without becoming a director or employee of any other Group Company and is not a Good Leaver'

Options Rules - Rights to Exercise Options

1. Rights to Exercise Options
   1. General
      1. shall not be exercisable before it has Vested in accordance with the Vesting Schedule set out in the relevant Option Holder's Option Agreement; and
      2. an Option may thereafter be exercised only on the occurrence of an exit event, as provided for in Rule 12;
      3. shall not be exercised later than the day before the tenth anniversary of the Date of Grant.
   2. Termination of Employment – Bad Leaver
      1. If the Option Holder is a Bad Leaver, the Option, whether Vested and unexercised or Unvested shall lapse immediately on the date upon which the Option Holder ceases to hold employment or office within the Group, or in the case of gross misconduct, on the date of occurrence of such misconduct.
   3. Termination of Employment - Good Leaver

If the Option Holder is a Good Leaver:

1. the Option shall be exercisable to the extent Vested as at the date of ceasing employment within 90 days of ceasing employment (or within any longer time period as referred to in section 532(1)(b) ITEPA);
2. the Option to the extent Unvested shall lapse immediately on the date upon which the Option Holder ceases employment, unless the Directors in their discretion determine before cessation that any Unvested part of the Option may be exercised within 90 days of ceasing employment (or within any longer time period as referred to in section 532(1)(b) ITEPA).

So that's that. I'd like your opinions as to whether I would be determined a 'good' or 'bad' leaver and whether this definition is fair and normal? AND if I am likely to be entitled to any of my vested options.

I'm happy to give any more details you might need to help me out. Thanks in advanced

 

[mattk]

Where I've seen a similar clause before, resignation is classed as a bad leaver.

However, there is a clause for director's discretion, which may be worth exploring depending on how much is at stake.

 

[obscure]

I'd like your opinions as to whether I would be determined a 'good' or 'bad' leaver....

A bad leaver is someone who does not meet the criteria for good leaver.
Resigning does not appear to be one of the criteria for being a good leaver.
Therefore if you resign you will be a bad leaver unless the Directors decide, at their discretion, that you are a good leaver.

.....and whether this definition is fair and normal? AND if I am likely to be entitled to any of my vested options.

You entered into a contractual agreement. Unless the contract is deemed illegal or unenforceable normal is irrelevant. I have seen lots of contracts that were not normal... doesn't make them unfair or unenforceable; and, on the matter of fairness... if you didn't think the contract was fair then I am afraid the time to raise that was before you signed it, not afterwards.

Based solely on the portion of the contract posted, no, you will not be entitled to any of your vested options.

 

[The Resolver]

Pretty nasty wording. Essentially whether or not you would be a good or bad leaver is left entirely to the discretion of the company i.e you are 'bad' unless the company agrees you are 'good'. So the advice is not to hand in your notice until you have received an email/letter from the company saying they agree your will be a good leaver. This will be the case , for example, when your leaving fits in with a general desire to reduce the headcount.