ESOP Restructure & Tax Advice
Circumstances / Situation
A scale up business was looking to provide all key management staff with an employee share and option scheme – “ESOP”. When the CFO and project planner were examining the outcomes involved with the proposed draft of the scheme, they realised they did not have sufficient advice or clarity on the tax outcomes to the business or staff. We were engaged to provide advice on where they stood with their existing plan, as well as pre-empting any issues.
Solution
Based on our tax advice, they realised their existing ESOP plans had several tax issues that would create significant cashflow problems for staff and the business. We were able to restructure the ESOP to ensure the tax issues were dealt with in a way that would not create any cashflow issues. Importantly, we delivered the incentive scheme everyone was after. This involved discussions with all stakeholders to better align the ESOP with everyone’s objectives.
Outcome
The restructured ESOP achieved everyone’s objectives and the business and staff no longer had any significant tax or cashflow issues.
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