ESOP fables

Corporate & Securities partner Jeckle Chiu (Hong Kong) are quoted in this article on employee stock ownership plans (ESOP) among Asian companies.

Jeckle comments that key challenges for start-up companies are valuating ESOP rights when there is not yet a public market for the company’s stock, and determining the appropriate size of the option or share pool for ESOP purposes. “There may be a misalignment in the perception of the employee share value between the company and its employees,” he says. “This hinders the company’s ability to maximise the intended effect of an ESOP in attracting and retaining talent. It also creates a material cost burden for the company when there is a need to value the ESOP rights before a liquidity event.”