How a Verbal Promise Overrode a Share Option Plan
Employers Beware: How a Verbal Promise Overrode a Share Option Plan
A recent High Court decision has highlighted the risks for employers who make informal assurances about share options. The case of Dixon v GlobalData PLC shows that even a verbal promise, if relied upon by an employee, can in some circumstances override the strict wording of a share plan.
Case background
In 2011, GlobalData PLC granted Mr Dixon non-tax-advantaged share options under its employee share option plan. When his employment was coming to an end in 2014, discussions took place about the terms of his departure.
During these negotiations, GlobalData’s CEO assured Mr Dixon that his share options would remain exercisable as if he had continued in employment. This assurance was recorded in a settlement agreement, which also contained post-termination restrictions.
Relying on the promise, Mr Dixon agreed to extend his employment by three months to assist with the transition. However, GlobalData never formally exercised the discretion required under the plan rules to extend his options.
Years later, when Mr Dixon attempted to exercise his options in 2020 and 2022, GlobalData refused, arguing that they had lapsed on termination of employment. Mr Dixon brought proceedings in the High Court seeking either:
- Specific performance – on the basis that the company had properly extended his options; or
- Damages based on proprietary estoppel – arguing that he had relied on a promise to his detriment.
The High Court’s decision
The court found that GlobalData had not followed the correct procedure to formally extend the options under the plan, and therefore the claim for specific performance failed.
However, the court concluded that the CEO’s clear and unequivocal assurance gave rise to a legitimate expectation that the options would remain exercisable. Mr Dixon’s reliance on that assurance — by agreeing to stay longer and foregoing other opportunities — was both reasonable and detrimental.
As a result, the court held that GlobalData was bound by its promise. Mr Dixon’s share options could therefore be exercised as if he had remained in employment.
Key lessons for employers
Although this decision does not create new law, it serves as a valuable reminder of how easily an employer’s informal actions or words can have unintended legal consequences.
- Avoid informal assurances: Verbal or off-the-cuff assurances can give rise to enforceable obligations if an employee reasonably relies on them. Keep all communications about share options formal and consistent with the plan terms.
- Follow plan procedures strictly: Where a share plan provides discretion — for example, to allow options to remain exercisable post-termination — that discretion must be exercised formally and in writing through the correct governance process.
- Align internal messaging: Ensure that senior managers understand the limits of their authority when discussing employee entitlements. Informal promises, even well-intentioned, can create binding expectations.
- Keep thorough records: All communications and decisions regarding share options should be clearly documented. This protects both the employer and employee from later disputes.
- Review template documents: Settlement agreements, side letters and option plans should include clear integration and non-reliance clauses, confirming that no promises exist outside the written terms.
Practical takeaway
The GlobalData case underscores the importance of precision and consistency when managing share option plans. In employment matters, promises can be just as powerful as policies — and, as this case shows, sometimes even more so.
Employers should ensure all communications about share options are carefully controlled, recorded and aligned with the plan documentation to prevent misunderstandings or costly litigation.
How we can help
If your business offers share options or other equity-based incentives, our Corporate and Employment teams can help you design, review and update your scheme documentation to minimise legal risk.
For tailored advice on share options or settlement agreements, contact The Jonathan Lea Network today to speak to one of our specialist solicitors.
Please email wewillhelp@jonathanlea.net providing us with any relevant details so we can make the call as productive as possible, or telephone us on 01444 708 640. Following this initial consultation, we will provide you with a tailored scope of work, a clear fee estimate (or fixed fee quote where possible), and confirmation of the next steps.
VAT is charged at 20%.
This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited.