In Dixon v GlobalData PLC [2025] EWHC 2156 (Ch), the High Court held that, under the doctrine of proprietary estoppel, a former employee was entitled to enforce an assurance made to them in their settlement agreement that their share options would continue following the end of their employment as if they had remained employed. For more information on this decision, including its practical implications (which remain relevant in the recent judgment), see our previous article.

In the subsequent hearing in Dixon v Globaldata PLC [2026] EWHC 850 (Ch), the court determined the amount of the employee's compensation for the refusal of their right to exercise the options. The court focused on two key issues:

(1) How should the compensation be calculated?

The claimant argued that compensation should be based on the market price of the shares at the time their request to exercise the option was refused, at which point the share price was significantly higher than when the options first became exercisable. The defendant countered that when employees wished to exercise their options and sell the resulting shares, this was achieved as a bulk sale through its broker at a fixed "strike price", regardless of when the notice of exercise was submitted.

The court agreed that the remedy should be determined by reference to the point at which the defendant's conduct became unconscionable, which is when the company denied the claimant's promised entitlement. However, it clarified that this does not mean compensation must always be based on the market price on the date of repudiation. This reference point is instead intended to ensure that all material factors are considered. The court found that, had the defendant properly notified the claimant of their ability to exercise, they would have likely exercised promptly such that they would have received an amount based on the "strike price", so that price was the correct basis for compensation in this case.

(2) Was the employee entitled to compensation for replacement options?

Certain options, including ones held by the claimant, were originally exercisable on achieving a third growth target. When COVID made this unachievable within the plan's lifetime, the defendant set up a new plan under which replacement options were granted to all continuing employees which then became exercisable. The defendant argued this new plan fell outside of its promise to the claimant as the claimant had not received any replacement options under the new plan at the time their employment terminated.

The court disagreed, finding it was reasonable for the claimant to understand the assurance as meaning they would be treated as if still employed and, therefore, as if they were in the same position as continuing optionholders. It rejected the argument that granting replacement options under a new scheme rather than extending the original options defeated the claimant's rights. The court also noted that the defendant's choice of structure was partly motivated by a desire to prevent the claimant's claim succeeding. Accordingly, compensation for these options was based on the bulk "strike price" achieved for those who exercised the replacement options.

How does proprietary estoppel apply to share options?

The leading authority on proprietary estoppel is the Supreme Court's decision in Guest v Guest [2024] AC 833, which sets out a two-step test. First, it is considered whether the promisor's repudiation of the promise is, given the promisee's detrimental reliance, unconscionable. Secondly, it determines the remedy, typically starting from the assumption that the promisor should be held to their promise, unless, for example, the promisor proves that doing so would be disproportionate to the promisee's detriment.

Equitable remedies are generally more flexible than those under the common law. The court will not necessarily aim to precisely compensate the promisee for their detriment and may adjust the outcome to achieve justice between the parties. 

If you would like to discuss any aspect of your company's share scheme in the context of employee terminations or otherwise, please contact Kathy Granby, Michael Birchall, Eva Leban or another member of the Lewis Silkin Share Incentives team.