The concept of Employee Share Ownership Plans (ESOPs) is a useful tool for achieving an advantageous relationship between employees and shareholders. ESOPs have been internationally identified to simultaneously increase employee satisfaction and the financial wealth of the companies.
In Cyprus, with its evolving trade and commerce sector, and the strive to become an international business and technology hub, ESOPs can play an important role in attracting and retaining highly skilled labour whilst at the same time promoting the interests of the company.
Aim of ESOPs:
ESOPs align the interests of the employees with those of the shareholders by rewarding them with the option to acquire company shares. ESOPs introduce motivation mechanisms like profit-sharing plans or option plans. By empowering employees to become shareholders in the company which they are employed, employee performance is tied to the financial performance of the company, thus enforcing the feeling of mutual responsibility for the company’s welfare.
Creating an ESOP:
The method of setting up an ESOP includes the following steps (a) a careful analysis of the financial structure of the company, (b) drafting of the ESOP rules, (c) complying with the applicable legal and tax framework in Cyprus, and (d) devise a plan for the allotment of the shares or options to the employees.
Cypriot businesses are attracted to the adoption of ESOPs considering in parallel the increase of company’s performance and employees job satisfaction.
If you are interested to create an ESOP, please contact us.