ESOP structuring

Approach and deliverables

We distinguish the option pool, grant, vesting and exercise stages and map employee eligibility and corporate approvals. The proposed benefits should align with the company’s capital structure and employment arrangements.

Deliverables can include a scheme brief, grant-data register and implementation checklist. Tax, valuation and accounting requirements are coordinated with the relevant advisers rather than inferred from the scheme’s commercial wording.

1. Document the incentive objectives and proposed pool.
2. Resolve the commercial choices for grants, vesting, exercise and departures.
3. Coordinate the scheme and approval documents within scope.
4. Hand over the grant register and administration responsibilities.

Keep the approved pool, proposed grants and actual grants distinguishable. A fully diluted planning table should not be confused with the register of issued shares.

Information to prepare

• Cap table and proposed pool
• Employee eligibility and grant objectives
• Vesting, exercise and leaver terms
• Existing shareholder and employment agreements

Prepare a decision sheet covering the intended participants, service conditions, exercise process and treatment of changes in role or employment. Identify promises already made in offer letters or communications so inconsistencies can be addressed before issuing documents.

A practical example

An employee leaving before all options vest needs a clear treatment under the scheme and grant documents. Resolve that rule before issuing grants rather than improvising it at exit.

For the departing employee, the administration record should identify the grant, relevant dates and applicable scheme terms before a conclusion is communicated. Keep vested, unvested and exercised positions separate and retain the evidence supporting any update.

Scope and responsibilities

The scope does not guarantee tax deferral, liquidity or a future share price. Listed-company and overseas-employee requirements need additional assessment.

The engagement letter records the workstreams included, client decisions and external professional costs. New transaction steps or material changes are assessed before the scope is extended.

The handover can include the scheme brief, grant-document set, administration register and decisions still requiring specialist input. Payroll, tax reporting, valuation and accounting implementation are included only where expressly specified. Future amendments and new grant cycles need an identified owner and record process.