After you set up your new company, one of the first legal
documents you will be thinking about is an incentive equity plan, sometimes referred to as an
“option plan” or an “ESOP”. This is key to
motivating early employees, who may be taking a lower base salary
for a share in the “upside” based on the
company's future success. This is the same in Singapore as
anywhere else—though in Singapore there are certain market
norms and legal considerations that vary from the U.S. and other
jurisdictions.
The purpose of this article is to give a general overview to
founders in Singapore who are thinking through the contours of
their equity compensation arrangements and how to best incentivize
their employees. This overview will also be useful for founders
with operations in other jurisdictions in Asia or elsewhere who
have chosen to set up their holding company in Singapore. It is
important to note that many of the concepts below are general
observations, but plans can and do
