Employee Share Options are a fantastic way to incentivize your employees and motivate them to work hard for the company. Employee Share Option Plans (ESOPs) give employees access to shares of stock that can be sold at a future date, which provides an incentive for the employee to push themselves harder to reap greater rewards later on. This article will provide five simple steps for setting up ESOPs.
1. Create a new Employee Stock Option Plan document with help from a lawyer or accountant specializing in this law area.
2. Determine how many shares you want your employees to have – it is recommended that you offer 10% of the total amount available as Employee Shares.
3. Calculate the Share Price, which is the price per share employees will pay for their Employee Shares. The share price should be 40-60% lower than what a third-party investor would pay.
4. Set a vesting schedule of up to five years, which is the amount of time that employees must work for you before they can fully own shares.
5. Make these share options available to full-time employees only.
ESOPs are a great way to retain employees and build company culture, as it offers your staff the opportunity to become co-owners of the business.