With new and burgeoning enterprises waging war over attracting and keeping talent, granting shares to their most formidable knights in exchange for loyalty is ever more popular. Putro Harnowo lends clarity to the myths and misconceptions

As the startup ecosystem in Asia matures, companies need high-quality talent to accelerate growth, but find their limited funding is only adequate to scale up operations, leaving fewer resources to hire and retain workers. This makes feasible a benefit plan that gives employees the right to purchase the company’s shares at a predefined or discounted price, called the employee stock ownership plan (ESOP).

Stock ownership has become a staple offering in developed economies and resulted in employees’ sudden wealth. When South Korean vaccine developer SK Bioscience went public on the local stock market last year, the company not only raised USD1.3 billion but also brought a fortune of KRW949.7 million (USD750,000) in share valuation for each employee invested in the ESOP, according to the local Maeil Business Newspaper.

Chae Jooyup, senior vice president of the Korea In-house Counsel Association (KICA), observes that many prominent lawyers have left law firms to join startups after being lured with stock options, granting a right to purchase a specific number of shares at a set price.

“The benefit of exercising those stock options could be greater than the monetary compensation,” says Chae. “Normally, the monetary compensation in a startup is...

Read Full Story: https://law.asia/employee-stock-ownership-plan-keep-talent/