b'Annual Report & Accounts 2022 Mercia Asset Management PLC 65Equity-based incentive schemesThe Group has a number of long-term incentive and retention schemes:The Mercia Company Share Option Plan (CSOP) GovernanceThe Remuneration Committee is responsible for issuing awards of options to purchase Ordinary shares under the Groups share incentive plan, known as the Mercia CSOP, which was adopted on 8 December 2014. All Executive Directors and employees are eligible to participate. The Committee intends that appropriate awards be made over time, not exceeding the limits contained in the Mercia CSOP.The Mercia CSOP comprises two parts. The first part satisfies the requirements of Schedule 4 to the Income Tax (Earnings and Pensions) Act 2003 (so that options granted under it are subject to capital gains tax treatment). The second part will be used to grant options which cannot be granted within the limit prescribed by the applicable tax legislation and which will not therefore benefit from favourable tax treatment. No options will be granted under the Mercia CSOP more than 10 years after its adoption. The number of Ordinary shares over which options may be granted on any date is limited so that the total number of Ordinary shares issued and issuable in respect of options granted in any 10-year period under the Mercia CSOP and any other employee share scheme is restricted to 10% of the issued Ordinary shares from time to time.The methodology for determining the market value of an Ordinary share for all grants of options under the Mercia CSOP has been agreed with HMRC, such that the Group will use the closing mid-market price quoted by the London Stock Exchange on the trading day immediately preceding the date of grant.All awards are subject to a performance condition. The performance condition requires that the total shareholder return from the date of grant to the third anniversary, is not less than 6% (compound) per annum for CSOPs issued up to and including 28 January 2020, and 8% (compound) per annum for options issued between 29 January 2020 and 31 March 2022. Where the performance condition has not been achieved on the third anniversary or if an employee leaves before the third anniversary, those options lapse.In the year to 31 March 2022, new share option awards were granted to a number of staff. The total number of options in issue as at 31 March 2022 was 27,507,139, including 8,800,000 Performance Share Plan options granted in 2021 (2021: 20,784,140 including nil Performance Share Plan options).The Mercia Carried Interest Plans (CIPs)Mercia Asset Management operates CIPs for the Executive Directors and certain other senior investment-focused staff (Plan Participants). Each CIP will operate in respect of direct investments made by Mercia Asset Management during a 24-month period, save that the first CIP was for the period from the plans adoption on 1 August 2015 to 31 March 2017. The second plan period ran from 1 April 2017 until 31 March 2019, with the third plan period running from 1 April 2019 to 31 March 2021. The fourth plan commenced on 1 April 2021 and will run to 31 March 2023.Once Mercia Asset Management has received an aggregate annualised 6% realised return during the relevant investment period, Plan Participants will receive, in aggregate, 10% of the net realised cash profits from the direct investments made over the relevant period, after taking account of any investment losses. Plan Participants carried interest is subject to good and bad leaver provisions.Mercia Asset Management also implemented a Phantom Carried Interest Plan (PCIP), based on the above criteria, in respect of the direct investments which the Group acquired shortly before admission to AIM in December 2014 and those new direct investments made in the post-IPO period leading up to the implementation of the CIP on 1 August 2015.'