Employee Share Plans in Europe and the USA - Sorainen

Employee Share Plans in Europe and the USADenmarkProvisions in employee share plans purporting to restrict employees’ rights toshare options upon termination of their employment will be set aside by Danishcourts as invalid. Instead, the employees' exercise rights will continue as if theywere still employed with the employer on the original terms and conditions of theshare option plan.An employee whose employment is terminated as described above is alsoentitled to receive a share, proportionate to the length of his employment in theaccounting year, of the grants of share options to which he would have beenentitled, according to agreement or custom, had he still been employed at theend of the accounting year or at the date of grant. 30An employee who resigns from his position by giving notice of termination to hisemployer or an employee who is terminated for misconduct automatically forfeitsall his rights to share options already granted whether vested or unvested. Theemployee also forfeits his rights to any future share options that he could haveexpected to receive, had he continued his employment. However, it ispermissible to agree more favourable rights in a share plan, e.g. that anemployee may exercise his vested share options within a certain period after histermination.The SOA also introduces an obligation on the employer to give the employeecertain information in writing and in Danish about the terms and conditions of theemployee share plan. 31 The actual plan documents need not be in Danish.9.3 Share awards granted before 1 July 2004Grants of share options made before 1 July 2004 are not subject to the SOA.Such grants are instead subject to the Danish Salaried Employees Act andprinciples of Danish employment law as outlined by the Supreme Court andother Danish courts in cases already decided and in future cases. It is likely thatshare options granted before 1 July 2004 will be considered part of an3031Thus, taking as an example, an employee who is employed in a company with an accounting year from1 January to 31 December is terminated from his employment on 30 June. Had the employeecontinued his employment with the company in the full accounting year he would, according toagreement or custom, have been granted 100 share options. In this situation the employee is entitledto receive a proportionate part of the anticipated share options amounting to half of the share options(50) at the time of grant that he would have been granted, had he continued his employment in the fullaccounting year.The following information must be given in Danish: the time of grant, conditions for grants, exercisetime, exercise price, the rights of employees upon termination and financial aspects of participating inan employee share plan. The employees will be entitled to compensation (the level of which is left atthe court's discretion) if the employer does not comply with these obligations.UK/1729295/03 40 September 2010