What should employers do now to protect their share option arrangements after Dixon v GlobalData PLC?
The High Court’s decision in Dixon v GlobalData PLC has become required reading for employers that operate employee share option schemes. While share options are often seen as a commercial incentive rather than a legal risk, this case is a clear reminder that how options are communicated, documented, and handled on exit can expose employers to significant and unexpected liability.
This article is designed to achieve Outcome A – Business Generation. It addresses a real and current legal risk that frequently results in instructions, particularly from employers reviewing option schemes, dealing with senior exits, or managing disputes with departing employees. It explains what the decision means in practice and, critically, what employers should be doing now to avoid similar claims.
What was the decision in Dixon v GlobalData PLC and why does it matter to employers?
The background in simple terms
In Dixon v GlobalData PLC, the court considered whether an employer was bound by assurances given to an employee about the treatment of his share options on exit, even though those assurances were not reflected in the strict wording of the share option plan.
The employer argued that the formal plan rules applied and that any informal statements or expectations could not override them. The employee argued that he had relied on clear assurances when making decisions about his departure and that it would be unfair for the employer to resile from those assurances.
The court agreed with the employee. It found that, in the circumstances, it would be unconscionable for the employer to rely solely on the plan rules where assurances had been given and relied upon.
Why employers should take notice
The decision matters because it demonstrates that:
- Share option plans do not operate in a vacuum.
- What is said by senior managers, HR, or the board can have legal consequences.
- Courts may intervene where reliance and fairness come into play, even in commercially drafted schemes.
For employers, this significantly increases the importance of consistency, clarity, and discipline around how share options are discussed and administered.
How does Dixon v GlobalData PLC change the legal risk around share options?
The limits of “the rules are the rules”
Many employers have historically taken comfort from the idea that a well-drafted share option plan will protect them from claims. While robust drafting remains essential, this decision shows that it is not always determinative.
Where an employer gives assurances, whether formally or informally, and an employee reasonably relies on them, the employer may be prevented from falling back on the strict wording of the plan.
A wider risk than many employers expect
The risk is not limited to board-level promises or written guarantees. It can arise from:
- Discussions during exit negotiations
- Emails or conversations with HR
- Statements made by senior executives
- Attempts to “smooth” a difficult departure
What matters is not just what was said, but how it was understood and relied upon by the employee.
What happens if share option terms are unclear or inconsistently applied?
Uncertainty creates opportunity for dispute
Ambiguity is one of the most common triggers for share option disputes. Where plan rules are complex, poorly explained, or applied inconsistently, employees are more likely to argue that they were entitled to different treatment.
In light of Dixon, employers should assume that courts will look beyond the plan document and examine the wider context.
Key risk areas include:
- Discretion clauses: Employers often rely on broad discretion wording, but inconsistent use of discretion can undermine this protection.
- Good leaver and bad leaver provisions: If these are applied flexibly in some cases and strictly in others, it can create expectations.
- Exit communications: Attempts to reassure an employee during a sensitive departure may later be relied upon as binding assurances.
Once a dispute arises, these issues are rarely confined to technical arguments. They often become credibility and fairness disputes, which are inherently harder to control.
What are the main lessons for employers granting share options?
Consistency matters as much as drafting
One of the clearest lessons from Dixon is that consistency is critical. Employers need alignment between what their documents say and how they behave in practice.
Employers should reflect carefully on:
- Whether managers understand the limits of what they can say about share options
- Whether HR communications are tightly controlled
- Whether discretionary decisions are documented and justified
Reliance can arise without intention
Employers do not need to intend to create legal obligations for reliance to arise. Well-meaning attempts to reassure or incentivise can be enough, particularly where an employee acts on that reassurance by resigning, accepting a settlement, or foregoing other opportunities.
This makes training and internal guidance essential, not optional.
What should employers do now to protect their share option arrangements?
Review and stress-test existing schemes
Employers should start by reviewing their existing share option plans and related documentation. The focus should not just be on legal drafting, but on how the scheme operates in reality.
This includes:
- Plan rules: Checking whether discretion clauses are clear and defensible.
- Leaver provisions: Ensuring these are precise and consistently applied.
- Supporting documents: Reviewing grant letters, policies, and guidance notes for mixed messages.
A scheme that looks robust on paper may still present risk if it is not administered carefully.
Control communications about share options
Communications are a major risk area. Employers should consider:
- Who is authorised to discuss share options with employees
- Whether standard wording should be used in exit discussions
- How emails and informal communications are managed
In many cases, relatively small changes to process can significantly reduce exposure.
Be cautious during exits and settlements
Departures are where most share option disputes arise. Employers should approach exit negotiations with particular care, especially where senior employees or long-serving staff are involved.
Key practical steps include:
- Clarity: Avoid ambiguous statements about what will happen to options.
- Alignment: Ensure settlement agreements are consistent with plan rules.
- Legal input: Take advice before giving assurances or concessions.
Early advice at this stage can prevent disputes that are far more expensive to resolve later.
Are there time limits and consequences employers should be aware of?
Claims do not always arise immediately
Share option disputes may surface months or even years after the relevant events, particularly where vesting or exercise dates are in the future. This makes record-keeping and documentation especially important.
Employers should assume that:
- Emails, notes, and internal discussions may be scrutinised later
- Decisions taken now may have long-term consequences
- Informal practices can come back to create liability
The commercial impact can be significant
Claims relating to share options often involve substantial sums and senior employees. They can also attract reputational risk, particularly where allegations of unfairness or broken promises are made.
Addressing risk early is usually far more cost-effective than defending a claim once it has escalated.
How JLN helps employers manage share option risk after Dixon v GlobalData PLC
Practical, employer-focused advice
JLN advises employers on the full lifecycle of share option arrangements, from scheme design and implementation through to exits and disputes. Our focus is on practical risk management, not theoretical analysis.
We regularly support employers with:
- Reviewing and updating share option plans
- Advising on discretionary decisions
- Supporting exits and settlement negotiations
- Managing disputes before they escalate into litigation
Experience where it matters
We understand that share options sit at the intersection of employment law, tax, and corporate incentives. Our advice reflects the commercial realities employers face when balancing retention, motivation, and legal risk.
Where issues arise, we work with employers to find proportionate, strategic solutions that protect both the business and its reputation.
Review your share option arrangements now before issues arise
The decision in Dixon v GlobalData PLC is a clear warning to employers that share option risk is not confined to drafting alone. What is said, how it is said, and how schemes are operated in practice all matter.
If your business operates share option schemes, or is negotiating exits where options are in play, now is the right time to review your arrangements. Early advice can help identify risk, tighten processes, and avoid disputes that are costly and disruptive.
If you would like to discuss how this decision affects your business, contact JLN to arrange a confidential conversation.
We usually offer a no-cost, no-obligation 20-minute introductory call as a starting point or, in some cases, if you would just like some initial advice and guidance, we will instead offer a one-hour fixed fee appointment (charged from £250 plus VAT depending on the complexity of the issues and seniority of the fee earner).
Please email wewillhelp@jonathanlea.net providing us with any relevant information or call us on 01444 708640. After this call, we can then email you a scope of work, fee estimate (or fixed fee quote if possible), and confirmation of any other points or information mentioned on the call.
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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.