Employee Share Incentives Law Firm

Employee Share Incentives Expertise

Employers face a dizzying array of choice when considering how to implement a share incentive scheme. Each type of scheme comes with its own specific set of benefits and drawbacks from a tax, legal and commercial perspective.

We help clients to understand the key issues and in order to design and implement the incentive plan which is the most appropriate to each client’s particular circumstances.

When issues arise with existing plans, our specialist lawyers resolve them quickly.

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Related Services

Designing equity incentive plans
Tax advice
Obtaining approval from Revenue (if relevant)
Communicating plan information to employees
Administration and edits of plans

Recent Work

Advised an Irish technology company implementing an employee share option plan (ESOP) for staff and growth share scheme for the founders and key senior management team.
Advised a US company on the roll-out of a share option plan to its Irish employees.
Assisted a UK-listed company to obtain Revenue approval for a “Save As You Earn” (SAYE) scheme.
Advised a large global resources business on the implementation of a Key Employee Engagement Programme (KEEP) share option scheme.
Advised a global technology business on the Irish tax implications of a bespoke share option arrangement for key employees.

Frequently Asked Questions

How does a share scheme work?

A share scheme works by granting employees a direct or indirect interest in the shares of a company. The form of interest will depend on the type of incentive plan used by the company. The company issuing the interest is often the parent company of the group, which may not necessarily be the direct employer of the individual.

What are the types of share incentive plan?

The two main types of share incentive plan are share-based plans and option-based plans. Share-based plans give employees a direct equity interest in the company. Options only give employees the right to be issued with new shares in the future. There are a range of ways to implement both share-based plans and option-based plans, and each type of scheme has particular advantages and drawbacks. We can help you to understand the most appropriate incentive scheme for your company’s particular circumstances.

How do share options work in Ireland?

A share option works by a company giving an employee a right (known as an option) to buy a specific number of shares in the company, at a specific price (known as the exercise price) and at a specific time (known as the option period).

The detailed rules of an employee share option plan (ESOP) are generally set out in a scheme rulebook. However, additional terms for specific employees may be included in the option certificates issued to those employees.

How big should an ESOP be?

An ESOP of 10% of the share capital is the most commonly cited rule of thumb for Seed and pre-Series A start-up companies in Ireland. However, practice varies significantly between companies, with pool sizes of 5% and 15% also being common at this stage. The size of the ESOP commonly rises as the company progresses past Series A and into further and larger funding rounds.

How are options taxed in Ireland? Do you pay tax on share schemes? Are employee shares tax free?

Tax may be payable by the company and/or by the employee. The timing and size of any tax liability will depend on a number of factors, including: the type of share or option scheme used, the tax residence of the parties and value of the shares or options.

Your Dedicated Team

Stephen Gillick

Partner

+353 87 246 1612

sgillick@mhc.ie

Conall Geraghty

Partner

+353 86 170 9634

cgeraghty@mhc.ie

Employee Share Incentives

Employee Share Incentives Expertise

Your Dedicated Team

Stephen Gillick

Conall Geraghty

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