In this guide we will demystify Employee Share Schemes (ESS) – often known as ESOPs, and give a simple structure to help Startup founders craft the best ESS policy for their venture.
The key for all Growth Business Founders is to attract top talent and to retain them in order to grow their business. Ownership (shares) or a path to ownership (options) in a Startup company excites new and potential employees and incentivises them to align their efforts to the company’s success.
Having a stake in the company may also improve your team's level of productivity, give them a sense of responsibility and strengthen their commitment to the business, because their shareholding is an asset that could increase in value with the right effort, commitment and hard work.
New Startups in particular are empowered to attract top talent and retain top talent with tax effective and simple to operate employee ownership schemes. They are often used as a form of compensation to make up for the difference between the cash salary and market rate, or to help retain staff for the long term.
These types of ESS come in two forms, offering either:
- Shares (“Share-based ESS”); or
- Options to buy Shares (“Option-based ESS”).
Why Azure Group?
Azure Group is a strong advocate for Employee Share Schemes (ESS). As a strategic advisor and growth-minded firm, we believe it's the power of a team that builds a successful business and not money alone.
Azure Group have designed and structured many Employee Share Schemes (“ESS”) that have delivered significant financial success for Founders, Executives and Staff, creating millions of dollars of wealth. Our ESS have also protected founders when the Executives or Staff have failed to hit their predetermined targets or left the business.
Our foundational mindset for an ESS is that is a long term incentive plan aligning the success of the Founders with their Team. It is not a short term incentive like a wage, bonus or commission. Get in touch.
Have you noticed our Friday Expert Tips... here's one that relates to Employee Share Schemes (ESS)
“The Commonwealth Government is making Employee Share Schemes more attractive – planning by 1 July 2022 to remove the ‘end of employment’ taxing point and reducing disclosure requirements.” Get in touch.