NEWS AND PUBLICATIONS

November 11, 2013 "Profit Test" as a pre-condition to dividend distribution (A motion to approve Derivative Action no. 49615-04-13 Lahav Vs. IDB Development Ltd. et al.)
November 11, 2013 The Boards duties to shareholders during merger approval procedures (Civil Case 9433-11-09 Mirkaei Tikshoret Ltd. et al. Vs. Gilat Satellites Networks Ltd. et al.)
December 17, 2013 A Violation of fiduciary duty by directors and officers (Civil Case 13484-03-09 Gad Hitron et al. Vs. Adi Teler)
November 28, 2013 A mechanism to adjust the exercise price of employees stock options plan
December 24, 2013 Public Utility Authority Electricity updates Feed-in-Tariff rates of residential and commercial PV systems
January 16, 2014 The minimal overall efficiency threshold of cogeneration plants is increased from 60% to 70%
 

November 28, 2013 A mechanism to adjust the exercise price of employees stock options plan

A private company residing in Israel (the "Company") has provided its employees with stock options from its parent company (the "Granting Company"). The company decided to grant the options under section 102 (b) (2) of the Income Tax Ordinance [New Version] 1961, known as capital gains track.

The option plan included a mechanism for adjusting the option's exercise price in such a manner that the exercise price increases each year by 8%, an incentive aimed to spur the employees to lead the organization towards accelerated growth.

Pursuant to Pre-Ruling No. 5286/13, the Tax Authority approved this adjustment mechanism, subject to several conditions, which include:

  • The percentage change of 8% is fixed and cannot be changed during the option's lifetime.
  • The percentage change of 8% must be uniformly distributed over the entire period, i.e., if an option is exercised in the middle of the option's period, the exercise price will be 4%.
  • The percentage change of 8% will be fixed and will also apply with respect to future grants of options under the same option plan.  

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