New stock options, old rules

Three employees had received RSUs and stock options during their employment, most of which were granted after 1 January 2019, when the new Danish rules on stock options were applicable. Although the stock plan was established before 2019, it has been changed since. Both the RSUs and the stock options were offered to employees through individual Award Agreements that had to be accepted.

The rules on stock options were significantly changed for employee share plans established after 1 January 2019. For stock options granted by agreement, the preparatory work to the Bill clarifies that the new rules apply to grant agreements entered into after that date. Under the old rules, employees were entitled to the value of RSUs and stock options upon resignation. Under the new rules, they lost that right.

The Danish Maritime and Commercial High Court stated that the RSUs and the stock options were covered by the old rules, as the plan itself was established before 2019. The later changes were not significant enough to consider the stock plan as a new plan, which became the deciding factor for this case.

IUNO’s opinion

Surprisingly, the Danish Maritime and Commercial High Court does not consider the difference between plans and agreements when determining whether the new or old rules apply. Therefore, it does not consider the fact that the grants in this case were made by agreement. In this respect, the judgment appears as incorrect. We have previously covered the changes in law and its ambiguity here.

IUNO recommends that you, as a company, be aware of the risk that employee stock option plans and similar employee stock plans may still be covered by the old rules. This will give you an opportunity to look at the possibilities for designing the plan, so it will be covered by the new rules.

[The Danish Maritime and Commercial High Court’s judgement of 5 February 2024 in cases BS-10130/2023-SHR og BS-10131/2023]