Allocate Share Options Schemes

Allocate Software PLC

("Allocate" or "the Company")

Allocate Share Options Schemes & Long Term Retention Plan

Change in Performance Conditions

Share Option Schemes

The Board reviewed in January 2014 the performance conditions with respect to share options granted under the Company's share options schemes since 1 January 2011. Since the performance targets were originally set, there has been a significant change in the Group's business model, with a greater proportion of revenues being recurring rather than perpetual or term license. This has had a corresponding impact on the Earnings per Share growth (which forms the basis of the share option performance conditions).

In view of this change in the business model, the Remuneration Committee recommended and the Board decided to amend the performance conditions for options granted since 1 January 2011. The principal changes are as follows:

- EPS Targets have been reduced, and are based on more realistic levels of growth given the increase in recurring revenue;

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- Each annual EPS target is to have two thresholds - a lower threshold, at which point 70% of the options in relation to that year will vest, and a higher threshold at which point 100% of the options in relation to that year will vest. 

- There is no longer any cumulative assessment of performance over the 3 year period, nor is there the potential to catch up performance in a subsequent year if a target is missed in a prior year.

 Long Term Retention Plan

Additionally, as part of the same review, the Board decided to amend the performance conditions of the Long Term Remuneration Plan ("LTRP") awarded to Ian Bowles in December 2011.

Under this plan, Ian Bowles was awarded in December 2011, 1,000,000 nil-price options over ordinary shares in the Company which would vest between September 2014 and September 2016 subject to (a) the Company's earnings per share increasing at or above a 15% annual compound growth rate; and (b) a demanding absolute total shareholder return ("TSR") against which options would vest on a sliding scale. 20% of the options will vest at a 15% annual compound TSR and the options would vest in full at or above a 25% annual compound TSR.

Three principal changes have been made to the LTRP. Firstly, the targets for TSR have been changed from a range of 15% - 25% to a range of 7.5% - 15%. Secondly, instead of 20% of the shares vesting at the minimum level of TSR achievement, the proportion that vests at this level is now 70%. Finally the earnings per share target have been changed to an annual compound growth rate of 5%.

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