ESOP and incentives for growing companies

An ESOP (Employee Stock Option Plan) for a Dutch startup involves a share option plan giving employees the right to purchase shares at a later point. You determine the option pool (typically 10–15% of shares), the vesting schedule (standard 4 years with 1-year cliff), the exercise price, and document this in an option plan and individual option agreements. Legalloyd guides you in setting up an ESOP that complies with Dutch tax and legal requirements.

An ESOP gives employees the right to actually purchase shares. A SAR (Stock Appreciation Right) gives the right to a cash payment equal to the increase in share value, without employees becoming actual shareholders. SARs are administratively simpler for employees but do not confer shareholder status. ESOPs do confer shareholder status but require a general meeting upon exercise. The right choice depends on your shareholder structure and tax situation.