Creating the right employee stock options for your company

Postlethwaite is an English law firm specialising in equity compensation, including employee stock options and stock purchase plans.

Please contact us if you want to create stock options or other equity compensation in your company, whether for one key employee, all your staff or any number of persons in between.

About stock option schemes

Employee stock options and other forms of equity compensation have the potential to transform your business by spreading the rewards - and sometimes the risks - of entrepreneurship to members of your team.

In the UK, stock options can (along with free and purchased stock) give both your company and your employees major tax incentives, making it a highly most cost-effective way of providing long term reward.

Even where tax benefits aren't available, we believe stock options and ownership are often the most powerful way of encouraging an employee to think like an owner.

The different kinds of stock options and other plans

The kind of stock plan you create is likely to depend on whether you want to reward your key people or all your employees:

Stock options for your key people

There are two stock options which give income tax relief for selected UK taxpaying employees:

• The Company stock Plan (CSOP)
• Enterprise Management Incentives
  Aimed at smaller companies (£30 million gross assets or less), with certain businesses excluded. Tax reliefs under an Enterprise Management Incentive scheme are the best of any UK stock options, and perhaps the best in Europe.

If CSOP or Enterprise Management Incentives are not the right solution, then we can suggest other stock option schemes or stock plans. [Download PDF Document]

Stock options and other plans for all your employees

There are two all-employee stock options which give income tax relief for UK taxpaying employees:

• Save As You Earn (SAYE) stock options - often called Sharesave.
• Share Incentive Plan (SIP)

The Share Incentive Plan gives a choice of different ways in which your employees may acquire stocks. They may:
- buy partnership shares out of their gross pay
- be allocated free shares
- be allocated up to two matching shares free for every one partnership share they agree to buy.

If you want an all-employee stock plan but SAYE options or the SIP are not available, we can also suggest other stock plans.

About Postlethwaite

We believe that finding the right stock option or other stock plan and making it deliver employee shares as efficiently as possible needs specialist professional advice. As the only UK solicitors firm focusing principally on stock options, we are here to help you find the best solution. We want you to share the benefit of our many years of experience gained in City law firms.

As we sometimes need to consider wider corporate law or employment law questions, we also have expertise in those areas.

Download our survey on stock plans in AIM companies Rewarding Growth in stocks