Preview | Executive Share Option Plan |

Rules of the New InterContinental Hotels Group Executive Share Option Plan

1 Definitions

1.1 Meanings of words used

In these Rules:

Annual Salary means basic annual salary excluding all payments additional to basic salary (for example mortgage support, expatriate allowance, etc.);

Business Day means a day on which the London Stock Exchange (or, if relevant and if the Directors determine, any stock exchange nominated by the Directors on which the Shares are traded) is open for the transaction of business;

Company means New InterContinental Hotels Group PLC (with registered number 5134420);

Condition means any conditions imposed under Rule 2.3;

Control has the meaning given to it by Section 840 of the Taxes Act;

Date of Grant means the date which the Directors set for the grant of an Option;

Directors means, subject to Rule 8.7, the board of directors of the Company or a duly authorised committee;

Eligible Employee means any person who:

(i) is an executive director or employee of a Participating Company; and

(ii) unless decided otherwise by the Directors, is not at the Date of Grant within 24 months of his anticipated leaving date;

Financial Year means the financial year of the Company;

ITEPA means the Income Tax (Earnings and Pensions) Act 2003;

London Stock Exchange means London Stock Exchange plc;

Member of the Group means:

(i) the Company; and

(ii) its Subsidiaries from time to time; and

(iii) any other company which is associated with the Company and is so designated by the Directors;

Model Code means the UK Listing Authority Model Code for transactions in securities by directors, certain employees and persons connected with them;

Option means a right to acquire Shares granted under the Plan which is subject to the Rules;

Optionholder means a person holding an Option or his personal representatives;

Option Period means a period starting on the Date of Grant of an Option and ending at the end of the day before the 10th anniversary of the Date of Grant, or such shorter period as may be specified on the Date of Grant;

Option Price means the amount payable for each Share on the exercise of an Option calculated as described in Rule 3;

Participating Companies means:

(i) the Company; and

(ii) any Subsidiary and any other company which in both cases is so designated by the Directors;

Plan means this plan known as The InterContinental Hotels Group Executive Share Option Plan as changed from time to time;

PRSP means the InterContinental Hotels Group Performance Restricted Share Plan as changed from time to time;

Regulatory Information Service means a service listed in schedule 12 to the UK Listing Authority Listing Rules;

Rolled Over Options means Options granted under the Plan in exchange for options granted under the Six Continents Plc Executive Share Option Scheme 1985 or the Six Continents Plc Executive Share Option Scheme 1995;

Rules means these rules of the Plan as changed from time to time;

STDIP means the InterContinental Hotels Group Short Term Deferred Incentive Plan as amended from time to time;

Shares means fully paid ordinary shares in the capital of the Company;

SIPs means the InterContinental Hotels Group Share Incentive Plan and the Britvic Share Incentive Plan as amended from time to time;

Subsidiary means a company which is a subsidiary of the Company within the meaning of Section 736 of the Companies Act 1985;

Taxes Act means the Income and Corporation Taxes Act 1988;

2 Grant of Options

2.1 Grant of Options

2.1.1 The Directors may resolve to grant to any Eligible Employee an Option to acquire such number of Shares as the Directors may determine at the Option Price. The Company will execute a deed on the grant of an Option.

2.1.2 Unless the Directors decide otherwise in any particular case, Options must not be granted to an Eligible Employee who has given or received notice of termination of employment with a Participating Company whether or not such termination is lawful.

2.1.3 The Directors may also resolve to grant a Rolled Over Option, subject to the terms of the Rules as modified by any special terms that they may set, to any person who

is an employee or former employee of Six Continents Plc or any of its Subsidiaries or former Subsidiaries.

2.2 Time when Options may be granted

2.2.1 Options may only be granted within 42 days starting on any of the following:

(i) the date of adoption of the Plan;

(ii) the day on which the Plan is formally approved by the Inland Revenue;

(iii) the day after the announcement of the Companys results through a Regulatory Information Service for any period;

(iv) any day on which the Directors resolve that exceptional circumstances exist which justify the grant of Options;

(v) any day on which changes to the legislation or regulations affecting share option plans are announced, effected or made; or

(vi) the day on which Shares are first admitted to the UK Listing Authority Official List and traded on the London Stock Exchange or admitted to any other stock exchange nominated by the Directors.

2.2.2 If the Directors do not grant any Options due to restrictions imposed by statute, order, regulation or Government directive, or by any code adopted by the Company based on the Model Code, the Directors may grant Options within 42 days after the lifting of such restrictions.

2.2.3 Options may be granted at any time between the adoption of the Plan and the 10th anniversary of that date.

2.2.4 The Directors may not grant Options on any day if the Option Price would be calculated as described in Rule 3.1 using any days immediately before the announcement of results through a Regulatory Information Service.

2.3 Conditions

When granting an Option, the Directors may make its exercise conditional on the satisfaction of certain conditions. The Condition must be objective and specified at the Date of Grant and may provide that an Option will lapse if a Condition is not satisfied. The Directors may waive or change the Condition in accordance with their terms or if anything happens which causes the Directors reasonably to consider that:

2.3.1 a changed Condition would be a fairer measure of performance, and would be no more difficult to satisfy; or

2.3.2 the Condition should be waived.

2.4 Option certificates

2.4.1 The Directors will send to each Optionholder an option certificate on or as soon as practicable after the Date of Grant. The certificate will either be the deed referred to in Rule 2.1 or a statement. The Directors will set the form of the certificate, but the certificate must be consistent with these Rules.

2.4.2 If any option certificate is lost or damaged the Directors may replace it on such conditions as they wish to set.

2.5 No payment

Optionholders are not required to pay for the grant of any Option.

2.6 Disclaimer of Option

Any Optionholder may disclaim all or part of his Option within 30 days after the Date of Grant by notice in writing to the Company. If this happens, the Option will be deemed never to have been granted under the Plan. Optionholders are not required to pay for the disclaimer.

2.7 Disposal restrictions

An Optionholder may not transfer, assign or otherwise dispose of an Option or any rights in respect of it. This Rule 2.7 does not apply to:

2.7.1 the transmission of an Option on the death of an Optionholder to his personal representatives; or

2.7.2 the assignment of an Option, with the prior consent of the Directors, subject to any terms and conditions the Directors impose.

2.8 Administrative errors

If the Directors try to grant an Option which is inconsistent with Rule 4 (Individual limit) or Rule 5 (Plan limits), the Option will be limited and will take effect from the Date of Grant on a basis consistent with those Rules.

3 Option Price

3.1 Setting the Price

The Directors will set the Option Price and state it on the Date of Grant.

The Option Price will be:

3.1.1 not less than the Market Value of a Share on the Date of Grant; and

3.1.2 if the Shares are to be subscribed, not less than the nominal value of a Share.

However, Rule 3.1.1 will not apply to Options granted in exchange for options granted under the Six Continents Executive Share Option Scheme 1985 or the Six Continents Executive Share Option Scheme 1995.

3.2 Market Value

Market Value on any particular day means:

3.2.1 where Shares of the same class are admitted to the Official List of the UK Listing Authority and traded on the London Stock Exchange:

(i) their middle market quotation on the immediately preceding Business Day; or

(ii) if the Directors so decide, the average of the middle market quotation on the 3 immediately preceding Business Days.

The middle market quotation is taken from the Daily Official List of the London Stock Exchange.

3.2.2 Where Shares of the same class are not admitted to the Official List of the UK Listing Authority, the market value of a Share calculated as described in Part VIII of the Taxation of Chargeable Gains Act 1992.

4 Individual limit

4.1 Market value limit

The conditions in Rules 4.1.1 and 4.1.2 must both be satisfied.

4.1.1 Subject to Rules 4.1.4 and 4.1.5, an Option must not be granted to an Eligible Employee if it would at the proposed Date of Grant cause the aggregate of the amounts payable on the exercise of Options granted under the Plan in any financial year to exceed:

(i) in the case of an Eligible Employee who is a director of the Company, 3 times his Annual Salary as at the Date of Grant; and

(ii) in the case of any other Eligible Employee, 4 times his Annual Salary as at the Date of Grant.

4.1.2 Subject to Rules 4.1.4 and 4.1.5 in any financial year no Eligible Employee shall be granted an Option which would at the proposed Date of Grant cause the aggregate of:

(i) 20% of the market value of the Shares over which an Option is granted under the Plan; and

(ii) 33% of the market value of the Shares over which an award is made under the PRSP

to exceed 130% of the Eligible Employees Annual Salary as at the Date of Grant.

4.1.3 For the purpose of Rule 4.1.2 the market value of a Share shall be calculated as follows:

(i) in respect of Options granted under the Plan, the market value shall be the Option Price of the relevant Shares on the date when each Option was granted; and

(ii) in respect of awards under the PRSP, the market value shall be the middle market quotation on the Business Day immediately preceding the conditional award date award under the PRSP.

4.1.4 No account shall be taken of Options or awards under the PRSP which have been released or have lapsed without being exercised.

4.1.5 The limits in this Rule 4.1 may be exceeded if the Directors determine that exceptional circumstances make it desirable that Options should be granted in excess of those limits.

4.2 Remuneration

Remuneration payable in a currency other than Pounds Sterling will be converted into Pounds Sterling at the average of the spot buying and selling rates with the relevant currency in comparable amounts by any clearing bank chosen by the Directors on a date chosen by the Directors.

5 Plan limits

5.1 10 per cent. 10 year limit

The number of Shares which may be allocated under the Plan on any day must not exceed 10 per cent. of the ordinary share capital of the Company in issue immediately before that day, when added to the total number of Shares which have been allocated in the previous 10 years under the Plan and any other employee share plan operated by the Company.

5.2 5 per cent. 10 year limit

The number of Shares which may be allocated under the Plan on any day must not exceed 5 per cent. of the ordinary share capital of the Company in issue immediately before that day when added to the total number of Shares which have been allocated in the previous 10 years under the Plan and any other discretionary share plan operated by the Company.

5.3 1.5 per cent. 1 year limit

The number of Shares which may be allocated under the Plan on any day must not exceed 1.5 per cent. of the ordinary share capital of the Company in issue immediately before that day when added to the total number of Shares which have been allocated in the previous 12 months under the Plan, the STDIP and the PRSP.

5.4 Exclusions

Where the right to acquire Shares is released or lapses without being exercised, the Shares concerned are ignored when calculating the limits in this Rule 5.

The following are also ignored:

5.4.1 when calculating the limits in Rules 5.1, 5.2 and 5.3 Shares awarded as partnership shares under the SIPs; and

5.4.2 when calculating the limit in Rule 5.3 rights to Shares issued in respect of options granted in exchange for options granted under the Six Continents Executive Share Option Scheme 1985 and the Six Continents Executive Share Option Scheme 1995.

5.5 Meaning of allocate

Allocate means granting an option or other right to acquire unissued Shares, or if there is no such grant, the issue and allotment of Shares.

6 Variations in share capital

6.1 Adjustment of Options

If there is a variation in the equity share capital of the Company, including a capitalisation or rights issue, sub-division, consolidation or reduction of share capital or a demerger (in whatever form) or exempt distribution by virtue of Section 213 of the Taxes Act or other distribution in specie or a special dividend:

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Shareholders Approval:		15 June 2005
Directors Adoption:		15 June 2005
IR Ref:		X22982
Expiry Date:		15 June 2015
Revenue Approval:


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Telephone (44-20) 7456 2000
Facsimile (44-20) 7456 2222

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Contents		Page
1	Definitions		1
2	Grant of Options		2
3	Option Price		4
4	Individual limit		5
5	Plan limits		6
6	Variations in share capital		6
7	Exercise and lapse - general rules		7
8	Exercise and lapse - exceptions to the general rules		7
9	Exchange of Options		12
10	Exercise of Options		13
11	General		15
12	Changing the Plan		17
13	Governing law and jurisdiction		19
Schedule 1 The InterContinental Hotels Group Executive Approved Share Option Plan			20

	(i)		is an executive director or employee of a Participating Company; and

	(ii)		unless decided otherwise by the Directors, is not at the Date of Grant within 24 months of his anticipated leaving date;

	(i)		the Company; and

	(ii)		its Subsidiaries from time to time; and

	(iii)		any other company which is associated with the Company and is so designated by the Directors;

	(i)		the Company; and

	(ii)		any Subsidiary and any other company which in both cases is so designated by the Directors;

	2.1.1		The Directors may resolve to grant to any Eligible Employee an Option to acquire such number of Shares as the Directors may determine at the Option Price. The Company will execute a deed on the grant of an Option.

	2.1.2		Unless the Directors decide otherwise in any particular case, Options must not be granted to an Eligible Employee who has given or received notice of termination of employment with a Participating Company whether or not such termination is lawful.

	2.1.3		The Directors may also resolve to grant a Rolled Over Option, subject to the terms of the Rules as modified by any special terms that they may set, to any person who

	(i)		the date of adoption of the Plan;

	(ii)		the day on which the Plan is formally approved by the Inland Revenue;

	(iii)		the day after the announcement of the Companys results through a Regulatory Information Service for any period;

	(iv)		any day on which the Directors resolve that exceptional circumstances exist which justify the grant of Options;

	(v)		any day on which changes to the legislation or regulations affecting share option plans are announced, effected or made; or

	(vi)		the day on which Shares are first admitted to the UK Listing Authority Official List and traded on the London Stock Exchange or admitted to any other stock exchange nominated by the Directors.

	2.2.2		If the Directors do not grant any Options due to restrictions imposed by statute, order, regulation or Government directive, or by any code adopted by the Company based on the Model Code, the Directors may grant Options within 42 days after the lifting of such restrictions.

	2.2.3		Options may be granted at any time between the adoption of the Plan and the 10th anniversary of that date.

	2.2.4		The Directors may not grant Options on any day if the Option Price would be calculated as described in Rule 3.1 using any days immediately before the announcement of results through a Regulatory Information Service.

2.3		Conditions

		When granting an Option, the Directors may make its exercise conditional on the satisfaction of certain conditions. The Condition must be objective and specified at the Date of Grant and may provide that an Option will lapse if a Condition is not satisfied. The Directors may waive or change the Condition in accordance with their terms or if anything happens which causes the Directors reasonably to consider that:

	2.3.1		a changed Condition would be a fairer measure of performance, and would be no more difficult to satisfy; or

	2.3.2		the Condition should be waived.

	2.4.1		The Directors will send to each Optionholder an option certificate on or as soon as practicable after the Date of Grant. The certificate will either be the deed referred to in Rule 2.1 or a statement. The Directors will set the form of the certificate, but the certificate must be consistent with these Rules.

	2.4.2		If any option certificate is lost or damaged the Directors may replace it on such conditions as they wish to set.

2.5		No payment

		Optionholders are not required to pay for the grant of any Option.

2.6		Disclaimer of Option

		Any Optionholder may disclaim all or part of his Option within 30 days after the Date of Grant by notice in writing to the Company. If this happens, the Option will be deemed never to have been granted under the Plan. Optionholders are not required to pay for the disclaimer.

2.7		Disposal restrictions

		An Optionholder may not transfer, assign or otherwise dispose of an Option or any rights in respect of it. This Rule 2.7 does not apply to:

	2.7.1		the transmission of an Option on the death of an Optionholder to his personal representatives; or

	2.7.2		the assignment of an Option, with the prior consent of the Directors, subject to any terms and conditions the Directors impose.

2.8		Administrative errors

		If the Directors try to grant an Option which is inconsistent with Rule 4 (Individual limit) or Rule 5 (Plan limits), the Option will be limited and will take effect from the Date of Grant on a basis consistent with those Rules.

3		Option Price

3.1		Setting the Price

		The Directors will set the Option Price and state it on the Date of Grant.

		The Option Price will be:

	3.1.1		not less than the Market Value of a Share on the Date of Grant; and

	3.1.2		if the Shares are to be subscribed, not less than the nominal value of a Share.

3.2		Market Value

		Market Value on any particular day means:

	(i)		their middle market quotation on the immediately preceding Business Day; or

	(ii)		if the Directors so decide, the average of the middle market quotation on the 3 immediately preceding Business Days.

4		Individual limit

4.1		Market value limit

		The conditions in Rules 4.1.1 and 4.1.2 must both be satisfied.

	(i)		in the case of an Eligible Employee who is a director of the Company, 3 times his Annual Salary as at the Date of Grant; and

	(ii)		in the case of any other Eligible Employee, 4 times his Annual Salary as at the Date of Grant.

	(i)		20% of the market value of the Shares over which an Option is granted under the Plan; and

	(ii)		33% of the market value of the Shares over which an award is made under the PRSP

			to exceed 130% of the Eligible Employees Annual Salary as at the Date of Grant.

	4.1.3		For the purpose of Rule 4.1.2 the market value of a Share shall be calculated as follows:

	(i)		in respect of Options granted under the Plan, the market value shall be the Option Price of the relevant Shares on the date when each Option was granted; and

	(ii)		in respect of awards under the PRSP, the market value shall be the middle market quotation on the Business Day immediately preceding the conditional award date award under the PRSP.

	4.1.4		No account shall be taken of Options or awards under the PRSP which have been released or have lapsed without being exercised.

	4.1.5		The limits in this Rule 4.1 may be exceeded if the Directors determine that exceptional circumstances make it desirable that Options should be granted in excess of those limits.

4.2		Remuneration

		Remuneration payable in a currency other than Pounds Sterling will be converted into Pounds Sterling at the average of the spot buying and selling rates with the relevant currency in comparable amounts by any clearing bank chosen by the Directors on a date chosen by the Directors.

5		Plan limits

5.1		10 per cent. 10 year limit

		The number of Shares which may be allocated under the Plan on any day must not exceed 10 per cent. of the ordinary share capital of the Company in issue immediately before that day, when added to the total number of Shares which have been allocated in the previous 10 years under the Plan and any other employee share plan operated by the Company.

5.2		5 per cent. 10 year limit

		The number of Shares which may be allocated under the Plan on any day must not exceed 5 per cent. of the ordinary share capital of the Company in issue immediately before that day when added to the total number of Shares which have been allocated in the previous 10 years under the Plan and any other discretionary share plan operated by the Company.

5.3		1.5 per cent. 1 year limit

		The number of Shares which may be allocated under the Plan on any day must not exceed 1.5 per cent. of the ordinary share capital of the Company in issue immediately before that day when added to the total number of Shares which have been allocated in the previous 12 months under the Plan, the STDIP and the PRSP.

5.4		Exclusions

		Where the right to acquire Shares is released or lapses without being exercised, the Shares concerned are ignored when calculating the limits in this Rule 5.

		The following are also ignored:

	5.4.1		when calculating the limits in Rules 5.1, 5.2 and 5.3 Shares awarded as partnership shares under the SIPs; and

	5.4.2		when calculating the limit in Rule 5.3 rights to Shares issued in respect of options granted in exchange for options granted under the Six Continents Executive Share Option Scheme 1985 and the Six Continents Executive Share Option Scheme 1995.

5.5		Meaning of allocate

		Allocate means granting an option or other right to acquire unissued Shares, or if there is no such grant, the issue and allotment of Shares.

6		Variations in share capital

6.1		Adjustment of Options

		If there is a variation in the equity share capital of the Company, including a capitalisation or rights issue, sub-division, consolidation or reduction of share capital or a demerger (in whatever form) or exempt distribution by virtue of Section 213 of the Taxes Act or other distribution in specie or a special dividend: