Pearson : Proposed Save for Shares Plan Rules - for shareholder approval at 2024 AGM

Para 6(2)

Para 10(1)

Para 25(2)

Para 28(1)(b)

Eligible Employee means:

1. any individual who, at the Invitation Date:
2. 1. is an employee or executive director of one or more Constituent Companies, who in the case of a director is required under the terms of their employment to devote at least 25 hours each week (excluding meal breaks) to their duties;
   2. has earnings from the office or employment referred to in (i) above which are (or would be if there were any earnings) general earnings to which section 15 of the Act applies (earnings for a year when the employee or executive director (as the case may be) is UK resident; and
   3. has been in Continuous Service with one or more Constituent Companies for such period as the Board may determine (not exceeding five years) prior to the Grant Date; or
3. any other individual who, at the Invitation Date, is an employee or director of one or more Constituent Companies and who is nominated by the Board (or falls within a category of individuals nominated by the Board) as eligible to participate in the Scheme in respect of any one or more grants of Options;

Exercise Price means the price per Share payable on the exercise of an Option as determined by the Board (subject to adjustment under rule 12) but which shall not be less than:

1. 80 per cent. of (i) the Market Value for a Share on the Dealing Day immediately before the Invitation Date; or (ii) the average of the Market Values for a Share on the three consecutive Dealing Days immediately preceding the Invitation Date (rounded up to the nearest whole penny); or (iii) the Market Value for a Share at such other time or times as may be agreed by HMRC; and
2. in the case of any Option under which Shares may be issued, the nominal value of a Share;

FCA means the UK Financial Conduct Authority;

Grant Period means the period of 42 days commencing on any of the following:

1. the Adoption Date;
2. the day immediately following the day on which the Company makes an announcement of its results for the last preceding financial year, half year or other period;
3. any day on which the Board resolves that exceptional circumstances exist which justify the grant of Options; or

Para 25(3)(b)

Para 7(1)

1. any day on which any change to the legislation affecting Schedule 3 SAYE Option Schemes is proposed or made;

the Group means the Company and the Subsidiaries and member of the Group shall be construed accordingly;

HMRC means His Majesty's Revenue & Customs;

the Invitation Date means the date on which an invitation to apply for an Option is issued;

Key Feature has the meaning given to that term by paragraph 40B(8) of Schedule 3;

the London Stock Exchange means London Stock Exchange plc or any successor body thereto;

Market Value means in relation to a Share on any day:

1. if and so long as the Shares are admitted to listing by the FCA, the lower of the two closing prices for a Share on that day (as derived from the Daily Official List of the London Stock Exchange) plus one-half of the difference between those two closing prices; or
2. subject to (a) above, its market value as determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992 and agreed in advance with the Shares and Assets Valuation Division of HMRC, and,

in either case, if the Shares are subject to any Restriction, as if they were not subject to any Restriction;

Minimum Amount means the amount of the monthly contribution to be paid under the Savings Contract being not less than £5 or such other minimum amount as may be permitted under paragraph 25 of Schedule 3 from time to time;

Non-UK Company Reorganisation Arrangement has the meaning given to that term by paragraph 47A of Schedule 3;

Option means a right granted under the Scheme to subscribe for or purchase Shares;

Option Holder means any individual who holds a subsisting Option (including, where the context permits, the legal personal representatives of a deceased Option Holder);

Relevant Event shall have the meaning given to that term in rule 11.1;

Restriction in relation to any Share has the meaning given to that term in paragraph 48 of Schedule 3;

Savings Contract means a contract under a certified contractual savings scheme, within the meaning of paragraph 24 of Schedule 3, the terms of which must be the same for each participant;

Paras 17 to 22

Para 11

Schedule 3 means Schedule 3 to the Act;

Schedule 3 SAYE Option Scheme has the meaning given to that term by paragraph 1 of Schedule 3;

the Scheme means this Pearson Plc Save for Shares Plan as amended from time to time;

Shares means fully paid and irredeemable ordinary shares in the capital of the Company, which comply with the conditions in paragraphs 17 to 20 and paragraph 22 of Schedule 3;

Subsidiary means any subsidiary of the Company within the meaning of section 1159 of and Schedule 6 to the Companies Act 2006 over which the Company has Control;

Treasury Share means a share held by the Company in treasury in accordance with section 724 of the Companies Act 2006;

Trustee means the trustee or trustees for the time being of any employee share trust established by the Company or any member of the Group from time to time; and

TUPE means the Transfer of Undertakings (Protection of Employment) Regulations 2006.

1. Where the context permits the singular shall include the plural and vice versa and the masculine shall include the feminine. Headings shall be ignored in construing the Scheme.
2. References to:
3. 1. any act of Parliament; or
   2. any Extra-Statutory Concession published by the Board of HMRC shall include any modification, amendment or re-enactment thereof.
4. This Scheme is intended to be a Schedule 3 SAYE Option Scheme for the purposes of the Act and the Scheme and any Option granted under it shall be interpreted, operated and administered in a manner that is consistent with that intention and in the case of any conflict between these rules and the provisions of sections 516 to 519 of and Schedule 3 to the Act (the legislation), the legislation shall prevail.

2. Invitation for Options

1. The Board may, during a Grant Period, invite all Eligible Employees to apply for Options at the Exercise Price.
2. Subject to the specific provisions contained in the Scheme, the form, manner and timing of invitations to apply for Options, the number of Shares in respect of which invitations are made on any date and whether the Options will be three or five year Options (or either of them, at the election of Eligible

Para 29

1. As soon as practicable after the Date of Grant, the Board shall procure the issue of an Option certificate to each Option Holder.
2. Options shall be granted in consideration of Eligible Employees agreeing to enter into Savings Contracts. No cash payment shall be made for the grant of an Option.
3. No Option shall be granted under the Scheme after the Company's annual general meeting in 2034.
4. Every Option granted hereunder shall be personal to the Option Holder and, except to the extent necessary to enable a personal representative to exercise the Option following the death of an Option Holder, neither the Option nor the benefit thereof may be transferred, assigned, charged or otherwise alienated. Any transfer of an Option otherwise than as permitted under this rule 5 shall cause the Option to lapse.

Para 25(3)(a)

6.1 No individual may be granted an Option if the entry into the related Savings Contract would result in the monthly contributions under that Savings Contract, when added to the sum of their monthly contributions under any other subsisting Savings Contracts and if the Board so determines from time to time, under any cancelled Savings Contracts (whether or not linked to a subsisting Option granted under a Schedule 3 SAYE Option Scheme),

Para 30(1)

exceeding £500 (or such other amount as is for the time being permitted under paragraph 25(3) of Schedule 3 and approved by the Board). No individual shall be permitted to make a monthly contribution of less than the Minimum Amount.

1. Any Option which is purported to be granted in excess of the limits in this rule 6 shall take effect as an Option which would not exceed those limits.

7. Scheme Limits

1. No Option to subscribe for Shares may be granted if the result of that grant would be that the aggregate number of Shares that could be issued on the exercise of that Option and any other Options granted at the same time, when added to the number of Shares that:
2. 1. could be issued on the exercise of any other subsisting share options, awards or other rights granted during the preceding ten years under the Scheme or any other employees' share scheme; and
   2. have been issued on the exercise of any share options, awards or other rights granted during the preceding ten years under the Scheme or any other employees' share scheme; and
   3. have been issued during the preceding ten years under any profit sharing scheme, employee share incentive scheme or any other employees' share scheme, agreement or arrangement,

would exceed 10 per cent. of the ordinary share capital of the Company for the time being in issue.

1. Reference in this rule 7 to the issue of Shares shall, for the avoidance of doubt, mean the issue and allotment (but not transfer) of Shares. Where Shares are or will be allotted or issued to the Trustee for the purpose of satisfying Options by way of a transfer of Shares by the Trustee, such Shares should be treated as issued or capable of being issued for the purpose of this rule 7.
2. For as long as UK institutional shareholders recommend, Treasury Shares held by the Company should be treated as issued or capable of being issued for the purpose of this rule 7.

8. Exercise and Lapse of Options

1. Save as otherwise permitted under these rules, an Option may only be exercised:
2. 1. during the six months following the Bonus Date relating to it; and
   2. by an Option Holder who is, at the date of exercise, a director or employee of a Constituent Company,

and, if not exercised, shall lapse at the end of the six month period following the Bonus Date.

Para 34

Para 32

8.2 Where an Option Holder ceases to be a director or employee of a Constituent Company before the expiry of six months after the Bonus Date:

1. on retirement; or
2. by reason of redundancy (within the meaning of the Employment Rights Act 1996); or
3. by reason of injury or disability; or
4. because of a relevant transfer within the meaning of TUPE; or
5. because the Constituent Company of which the Option Holder is a director or employee ceases to be an associated company (as defined in paragraph 35(4) of Schedule 3) of the Company by reason of a change of control (as determined in accordance with sections 450 and 451 of the Corporation Tax Act 2010); or
6. because the business (or part of a business) in which the Option Holder is employed is transferred to a person who is not an Associated Company where the transfer is not a relevant transfer within the meaning of TUPE,

they may exercise any outstanding Options within six months of the date on which their employment ceased, failing which exercise the Options shall lapse automatically provided that the Options may not be exercised more than six months following the relevant Bonus Date.

1. Where an Option Holder ceases to be a director or employee of a Constituent Company before the expiry of six months after the Bonus Date for any other reason other than dismissal for gross misconduct, breach of contract or serious shortfall in performance, they may exercise any outstanding Options which were granted more than three years before the date of cessation of employment within six months of the date on which their employment ceased, failing which exercise the Options shall lapse automatically, provided that the Options may not be exercised more than six months following the relevant Bonus Date.
2. Where an Option Holder ceases to be a director or employee of a Constituent Company before the expiry of six months after the Bonus Date in any circumstances other than those set out in rules 8.2 and 8.4, their Options shall lapse automatically.
3. If an Option Holder dies while in service or at any time after leaving service when they hold an Option, such Options may be exercised by their personal representatives at any time within the twelve month period following:
4. 1. the date of death, if such death occurred before the relevant Bonus Date; and
   2. the Bonus Date, in the event of their death on or within six months after the relevant Bonus Date,
      failing which exercise, the Options shall lapse automatically.

Para 36

For the avoidance of doubt, an Option exercisable under this rule 8.5 shall not lapse prior to the expiry of the specified twelve month period by virtue of rules

8.2 to 8.4.

8.6 For the purposes of rules 8.2 to 8.3, an Option Holder shall not be treated as ceasing to be a director or employee of a Constituent Company until:

1. 1. they cease to hold an office or employment in the Company or any company over which the Company has Control or any Associated Company;
   2. they cease to hold an office or employment in a jointly owned company within the meaning of paragraph 46 of Schedule 3 (being a jointly owned company which is not a participating company in more than one group scheme); or
   3. being a director or employee who is absent from work wholly or partly because of maternity, paternity leave or shared parental leave (as appropriate), ceases to be entitled to exercise any statutory or contractual right to return to work.
2. Notwithstanding rule 8.1(b), if, at the Bonus Date, an Option Holder holds an office or employment in a company which is not a Constituent Company but is an Associated Company or a company over which the Company has Control, Options may be exercised within (but no later than) six months following the Bonus Date.
3. If, before the Option has become exercisable, the Option Holder:
4. 1. gives notice, or is deemed to have given notice, under the terms of the related Savings Contract that they intend to stop paying contributions to that Savings Contract; or
   2. makes an application for repayment of the related Savings Contract, the Option shall automatically lapse.
5. If an Option Holder is declared bankrupt or enters into any general composition with or for the benefit of their creditors including a voluntary arrangement under the Insolvency Act 1986, their Options shall automatically lapse.

Paras 24(1), 25(1) and 26(3)

9. Method and Extent of Exercise

9.1 An Option may only be exercised with monies as nearly as possible equal to but not exceeding the amount repaid under the related Savings Contract, including any bonus or interest as at the date of repayment. No account shall be taken of any repayment of any contribution the due date of which arises after the date of repayment, or any bonus or interest in respect of that contribution.