Income Tax (Earnings and Pensions) Act 2003 section 39

Performance allowances: targets and measures

Section 39 sets out the requirements that Share Incentive Plans must meet when they include performance allowances, specifically concerning how performance targets are set and how performance is measured.

• Performance targets must be set for defined performance units made up of one or more employees.
• Performance measures must be based on business results or other objective criteria.
• The measures used must be fair and objective in assessing the performance of the units to which they apply.
• For the purposes of awarding free shares, an employee must not belong to more than one performance unit.