ESOPwith expert lawyers

An Employee Share Option Plan (ESOP) is a way for companies to incentivise and retain valuable employees. Under an ESOP, companies offer employees rights to buy shares in the company. These rights usually come with certain conditions, such as minimum employment periods and/or minimum KPIs that the employee must meet. Our expert lawyers can take your instructions and draft an ESOP to suit your specific needs.

An ESOP is a common arrangement for startups that allows team members to receive and/or purchase securities in the company. Generally, the employer approaches the employee with the offer, and it’s up to the employee whether they accept it.

In Australia, a recipient of ESOP securities cannot own more than 10% of the company in total. An ESOP is generally used to grant equity to new team members rather than founders.

Broadly, ESSs (Employee Share Schemes) involve issuing shares directly to employees, while ESOPs give employees the opportunity to acquire shares in their company through a share option plan. However, there are several important differences between the two. There may also be tax and concession benefits to consider, particularly in light of the 2015 reforms. Our team can talk you through the differences and help you decide which option is best for your business.

Before deciding to implement an ESOP, you should consider:

• whether your company qualifies for the startup tax concessions
• how large your ESOP pool should be
• what the exercise price of each option will be
• whether the options should be subject to vesting
• when employees can exercise their options

This package starts at $500 + GST. As part of the package, our expert lawyers will draft an ESOP to meet your business’s requirements. You’ll receive phone consultations with our lawyers and one complimentary amendment to the final draft we provide. We’ll also review the company constituent documents, draft the ESOP Plan Rules, and advise on the variables required to prepare the offer letter. We can also assist with preparing offer letters for your first round of ESOP participants, and prepare the required board and member resolutions.