Equity Incentive Awards

Past decades have seen an increase in the role played by equity based awards in the various incentive packages offered by companies to their employees and service providers.

The summary below contains a general overview regarding the legal aspects relating to the granting of equity based awards ("Awards") to employees and service providers in Israel, as well as the main issues generally covered by equity incentive plans.

A. LEGAL TERMS AND CONDITIONS FOR GRANTING AWARDS

Under Israeli tax law, equity based awards reside under one of several legal "tracks", with different conditions and tax implications included in each such track. The primary distinction in this regard is between Awards granted under section 3(i) of the Israeli Income Tax Ordinance [New Version] – 1961 (the "Ordinance") and those granted under section 102 of the Ordinance.