Choose and launch an employee share ownership plan

Who this is for

Founder led lower-middle market companies with 5 to 50 million in annual revenue that want to retain and align key people over several years.

The quick answer

Add a plan when profit and reporting are stable. Choose between real equity, options, or a phantom plan. Tie grants to impact and keep vesting simple. Explain value in plain words and show expected outcomes.

The method in eight steps

Clarify the goal
Retention of critical people, attraction of senior talent, and alignment with enterprise value.
Choose the plan type
Real equity brings votes and dividends. Options grant the right to buy later at a set price. Phantom units mirror value without issuing shares and pay in cash at a trigger.
Pick eligibility and pool size
Decide who can participate and how large the pool should be for the next three years.
Design grants and vesting
Use simple time based vesting such as four years with a one year cliff. Add performance vesting only when you can measure it fairly.
Write taxation and exit rules
Explain how gains are taxed in your jurisdiction. Define what happens at exit, at departure, and at change of control.
Link grants to impact
Create a scorecard for role impact and scarcity so grants are consistent.
Explain value in plain words
Share two worked examples that show what the plan could be worth under base and upside cases. Avoid jargon.
Run the plan well
Keep clean records, communicate annually, and refresh grants only during set windows.

Example

A company at twenty nine million launched a phantom plan for fifteen leaders. Grants used a simple scorecard and four year vesting. The firm shared worked examples and an annual statement. Retention improved and hiring at senior levels became easier.

Pitfalls and fixes

Complex vesting that confuses people. Keep vesting simple.
Grants based on titles. Tie them to impact and scarcity.
Weak communication. Use worked examples each year.

Checklist

Plan type selected
Eligibility and pool defined
Vesting rules and exit terms
Grant scorecard
Communication plan and examples