Does TUPE protect stock options?

[prichards]

A part of our (publicly listed) company (call it 'X') is being transferred to a private equity firm under TUPE regulations.

 

Many of us have a sizeable number of Stock Options in 'X' which we have been told will simply be lost since the Terms & Conditions for the Stock Option scheme state that if we leave the employment of 'X' then we lose any options which haven't yet vested and we will have just 3 months to exercise any options which have vested. The problem with exercising is that the share price of 'X' is currently at a low.

 

Does TUPE place any requirements on the new company to honour the existing stock option arrangements or do we just have to reconcile ourselves to losing them?

 

 

Regards,

Peter

[paulgmb]

Hi Peter,I believe you would lose them. Some shares I held with a previous employer were protected and we were allowed to keep them for 3 years for tax reasons, however in your case you seem to be saying that you have not yet exercised your options because of the low share price, so as such the only thing you are seeking to protest is your option to buy in the future.I don't believe your new employer would be able to protect this option either as they would have no method of providing stock at a presumably preferential rate.Unless I'm mistaken, it looks like bad luck!Regards,Paul.

[Sidewinder]

I agree with Paul. You will unfortunately lose the existing shares if they cannot be offered by the new company.

 

It is worth noting though that if you currently enjoy share options as an incentive, the new employer must also provide you with a similar benefit, either in share options, or an equivalent benefit in kind. This should be a part of the employee consultations ahead of the transfer.