Creating a win-win employee share plan

Heard of ESOPs – employee share ownership plans? Very possibly. Loan bonus schemes, performance share rights, phantom shares? Less likely.

All are ways of providing (usually senior) employees with a stake in the business. But what options are on offer, and what would work best for your organisation?

We outline some of the obstacles in implementing a plan and some of the factors involved in plan design.

WHY HAVE AN ESOP?

ESOPs can provide a range of benefits:

• a retention incentive for key employees
• an exit strategy for current owners
• a mechanism to expand the ownership structure of the firm
• a longer term capital appreciation opportunity for employees than the cash bonus, or