💷 Adjustment and clawback rule

The Overestimated Performance Rule for Option Plans (Adjustment and Clawback) legal template under UK law provides a comprehensive framework for addressing situations where an employee's performance-related stock options or incentives were granted based on incorrect or overstated performance measures.

This legal template aims to establish guidelines for adjusting and potentially clawing back such option plans, ensuring fairness and accountability for both employees and the company. It outlines the necessary provisions, terms, and conditions for implementing adjustments or clawbacks, safeguarding the interests of both parties involved.

The template may cover various aspects, including the circumstances triggering adjustment or clawback, the process for initiating and implementing adjustments, the communication and consultation procedures with affected employees, and the appeals and dispute resolution mechanisms available. It may also outline specific conditions that need to be met for adjustments or clawbacks to occur, such as the degree of overestimation, timelines, and the impact on vested or unvested options.

Furthermore, the legal template may address the legal and regulatory compliance requirements, taking into account UK laws, regulations, and best practices governing option plans, employment contracts, and compensation schemes. It may highlight the need to comply with applicable legislation, such as tax laws, corporate governance rules, and relevant provisions of the Companies Act.

Overall, this legal template provides a comprehensive approach to address situations where performance-related option plans or incentives have been based on overestimated performance measures, ensuring fairness, transparency, and compliance with UK laws.