Share Options And Share Option Schemes

The principal reasons why a company may wish to consider share schemes for its employees are as follows:

To encourage an employees to remain with the company until a key defined target or objective is achieved such as performance targets.
For a company in its early stages or one that is fast growing, the conversion from immediate cash benefits for its employees to a reward in the form of potentially valuable shares can be extremely beneficial for both parties.
To reward employees ahead of a potential sale for their loyalty. It is not surprising for the shareholders of a company to share the sale proceeds with employees who have helped contribute to the creation of the company's value.
To permit employees to obtain and sell shares in a tax-efficient manner over a period of time in order to help increase motivation and performance.
To offer employees as a benefit over and above any competitors.

Employee share schemes should always be tailored to match the specific needs and goals of the company. They may, for example:

Award shares or grant options dependent on achieving a certain defined target or objective;
Permit employees to become shareholders only on the sale or flotation of the company;
Limit the scheme to certain key employees; or
Require an employee to have served a certain number of years of service

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