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Over the last few years our firm has been setting up an increasing number of EMI schemes using what I call the ‘hybrid’ design which is kind of a cross between a pure exit-only or time-based plan. The hybrid is typically known as the ‘four year vest, one year cliff’ option and is particularly popular with tech companies.

When it comes to employee share schemes you will often hear or read the term ‘option pool’ but what is it and what are the implications for shareholders and staff?

Share options are very useful for companies who wish to incentivise and retain key employees and a CSOP scheme can provide significant tax advantages. An individual can now hold CSOP options over shares with a value of up to £60,000, up from £30,000 previously. A CSOP can often be used by companies that may not qualify for an EMI option scheme.

Growth Shares can be a good solution for companies who wish to incentivise and retain key employees using equity in a situation where an EMI share option scheme is prohibited due to legislative restrictions. Growth shares can still provide significant tax advantages to those employees.

This is an update from my blog from two years ago – I have reviewed the various providers again so that I could refresh the information given.

This blog covers how to structure your EMI options scheme in terms of when the employees can actually buy their shares.

Most people will have heard of share options and have an idea that they can be a great inspiration. They are indeed, and better still put no demand on your cash flow.

EMI share options are the best way to incentivise employees by giving them a real stake in a company.