Restricted Stock Unit Award Agreement Template for England and Wales

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Key Requirements PROMPT example:

Restricted Stock Unit Award Agreement

"I need a Restricted Stock Unit Award Agreement for a senior software engineer in our UK tech startup, with quarterly vesting over 4 years starting from March 2025, and including specific provisions for what happens in case of an IPO."

Document background
The Restricted Stock Unit Award Agreement is a crucial document used when companies want to provide equity-based compensation to employees without immediately issuing actual shares. Under English and Welsh law, this agreement forms part of the company's equity incentive framework, typically used for employee retention and alignment with shareholder interests. The document needs to comply with UK tax legislation, the Companies Act 2006, and relevant financial services regulations. It specifies vesting conditions, settlement procedures, and tax treatment, while also addressing scenarios such as employment termination or corporate reorganizations.
Suggested Sections

1. Parties: Identification of the company and the award recipient

2. Background: Context of the award and reference to any equity incentive plan

3. Definitions: Key terms used throughout the agreement

4. Grant of RSUs: Details of the award including number of units and grant date

5. Vesting Schedule: Timing and conditions for vesting of RSUs

6. Settlement Terms: Process for converting RSUs into shares or cash

7. Tax Obligations: Treatment of tax liabilities and withholding requirements

8. Termination Provisions: Impact of employment termination on RSUs

Optional Sections

1. Change of Control Provisions: Treatment of RSUs in case of company sale or merger - recommended for listed companies or those anticipating corporate transactions

2. Malus and Clawback: Provisions for reduction or recoupment of awards - recommended for senior executives or regulated entities

3. International Provisions: Country-specific terms for global awards - recommended for multinational companies

Suggested Schedules

1. Vesting Schedule: Detailed breakdown of vesting dates and conditions

2. Tax Treatment Summary: Overview of tax implications in relevant jurisdictions

3. Plan Rules Extract: Relevant excerpts from the main equity incentive plan

4. Notice of Exercise Form: Template for exercising vested RSUs

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant Industries
Relevant Teams
Relevant Roles
Industries

Companies Act 2006: Primary legislation governing company operations including share capital provisions, directors' duties, registration requirements, and disclosure obligations for RSU schemes

Employment Rights Act 1996: Key employment legislation that must be considered in RSU agreements to ensure compliance with basic employment rights and protections

Equality Act 2010: Ensures RSU awards are implemented in a non-discriminatory manner across protected characteristics

Income Tax (Earnings and Pensions) Act 2003: Governs the taxation of employment-related securities and RSU awards

Financial Services and Markets Act 2000: Regulates financial services, securities offerings, and market abuse provisions relevant to RSU schemes

Income Tax (Employment Income) Regulations: Specific tax regulations governing the treatment of employment-related securities and share awards

UK GDPR and Data Protection Act 2018: Ensures proper handling and protection of personal data involved in RSU administration

UK Corporate Governance Code: Sets out standards of good practice for listed companies regarding remuneration and share-based incentives

Market Abuse Regulation (UK MAR): Prevents insider trading and market manipulation in relation to share-based awards

Schedule 23 Finance Act 2003: Establishes reporting requirements for employment-related securities including RSU awards

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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