Employee stock option programs in start-ups in Europe and The USA: high technology industry
Chesnut, Katie (2018)
Pro gradu -tutkielma
2018
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe201803023645
https://urn.fi/URN:NBN:fi-fe201803023645
Tiivistelmä
The focus of this thesis is to examine employee stock option programs in start-ups operating in the high technology industry in Europe and the USA. It looks at the characteristics of such plans, core driving factors to implement an employee stock option plan, and opinions from management. With the increase of “start-up culture”, granting employee stock options to regular employees has increased in popularity.
Literature suggested the core driving factors to implement an employee stock option program was motivational benefits and flexibility, as there is no guarantee the options will be exercised and payment will need to be made. An exploratory survey was then created to collect information from management of high technology start-ups about specific plan characteristics, reasons to implement, and opinions regarding employee stock options.
Most companies set aside 6-10% of total equity for employee stock options. Vesting periods varied from three to over four years. The most common vesting type was a combination of cliff and uniform. Most employee stock option rights were valid for employees 5-10 years in the USA, and 0-5 years in Europe.
The main reason to implement an employee stock option plan was motivation. Other significant factors included employee retention and attracting talent. Overall, managers both in Europe and the USA believed an ESOP is beneficial for motivation and employee well-being.
Literature suggested the core driving factors to implement an employee stock option program was motivational benefits and flexibility, as there is no guarantee the options will be exercised and payment will need to be made. An exploratory survey was then created to collect information from management of high technology start-ups about specific plan characteristics, reasons to implement, and opinions regarding employee stock options.
Most companies set aside 6-10% of total equity for employee stock options. Vesting periods varied from three to over four years. The most common vesting type was a combination of cliff and uniform. Most employee stock option rights were valid for employees 5-10 years in the USA, and 0-5 years in Europe.
The main reason to implement an employee stock option plan was motivation. Other significant factors included employee retention and attracting talent. Overall, managers both in Europe and the USA believed an ESOP is beneficial for motivation and employee well-being.