Employee Share Option Plans ('ESOP')
Employee equity for startups

What is an ESOP?

An ESOP is a structured plan to provide employees with equity in your company. For the right companies it is a powerful tool to align the interests of your employees with the goals of your company, fueling it’s growth.

The advantages of a correctly constructed ESOP can help you:

  • attract and retain talented staff
  • improve productivity and profitability
  • engage employees in big picture of company
  • provide a way for employees to build long-term wealth

Considerations

  • Is an ESOP appropriate for my company?
  • Is my company and it’s employees eligible for concessions under income tax laws (namely the ‘Startup Concession’)?
  • What are my disclosure obligations under the Corporations Act 2001 for offers of securities I make to my employees?
  • How to I value my company and the securities offered?
  • What reporting do I need to provide to employees and the ATO?
  • What is the most appropriate structure and terms? i.e. Option pool size, vesting schedules, good leaver vs bad leaver provisions.

How we can help

We have an extensive work program to allow us to efficiently develop and implement an ESOP for young, growing businesses. Our process ensures that:

  1. An ESOP is approriate in the first place
  2. It is tailored to your company
  3. You and your employees are educated and understand the ESOP
  4. The ESOP is properly managed and reviewed on an ongoing basis

mi-fi vs Other ESOP Services

We don’t point you to an online form, spit out a document to sign and see you on your way. Our approach is holistic, meticulous and ongoing. We design an ESOP that takes into account the unique needs of your company and its employees.

We take the time to educate all parties and ensure that there is buy in from everyone so that the ESOP delivers the intended result, a motivated team.

Tax and disclosure are complex topics and when things go wrong they can have a significant consequences. Invest in getting your ESOP right from the start.

Use our free pre-assessment tool to instantly see if your company is eligible to use the Startup Concession.

Our Process


Consult

We take the time to first assess whether an ESOP is appropriate, educate you on the key aspects and ensure that you are eligible for the Startup Concession. This helps you make an informed decision before making any further investment in the process.

Design

There is no one size fits all when it comes to creating an ESOP that supports the goals of an individual company.  We sit down with you to understand what makes your business tick and come up with a customised employee equity strategy.

Implement

We take your employee equity strategy and prepare the necessary documentation and resources to implement it. We are big on explaining the why and the how at each step of the process so you and your team are fully invested in the ESOP.

Support

Your ESOP is a dynamic tool that is not just set and forget. Employee equity is only successful where there is transparency with employees and ongoing management of compliance obligations. We support your ESOP’s success by managing these elements for you.

Pricing


Assess

Fixed at $990

  • ESOP suitability assessment.
  • Review of your company’s eligibility for the Startup Concession.
  • Letter of advice outlining eligibility, suitability and implementation plan.
  • ESOP education briefing to owners.

Implement

From $3,000

  • Work with you to develop an ESOP strategy, unique to your company.
  • Outline and manage the implementation process of your ESOP.
  • Valuation of options.
  • Preparation of tailored ESOP documentation for legal review.1
  • Set-up options register and vesting schedule.
  • Facilitate initial offers of option to employees
  • Initial briefing to current employees, covering key aspects of the ESOP.

Manage

$275 p.a. per employee

  • Facilitating further offers to new or existing employees.
  • Maintaining options register and vesting schedule.
  • Annual valuation of options to be used for new offers.2
  • Annual update to employees on the status of their vested options.
  • Support for questions about the ESOP from management and employees.
  • Preparation and lodgement of annual report to employees and ATO.

  1. Whilst we provide proforma documentation in line with the suggested Employee Equity strategy, we require that this documentation be reviewed by a lawyer to ensure it is drafted correctly in line with your company’s other governance documents. We recommend using our lawyers who are familiar with our process and documentation, however, we are happy to work with your existing lawyers. No legal services are included in our fees.
  2. The Net Tangible Assets method is used based on the Company’s financial statements for the most recent financial year. Where any other method of valuation is considered we will provide a quote.

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ESOP Guide

See our ESOP series of articles to learn more about implementing an ESOP for your company.

View Guide

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