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An EESOP Can Be an Effective Retention Strategy for Key Employees

An Employee Stock Option Plan (ESOP) in Hong Kong can be an effective retention strategy for employees that you want to keep around in the company. An ESOP means giving your chosen employees some stop options.

 

How the Employee Stock Option Plan (ESOP) Works

The ESOP plan in Hong Kong works whereby the company offers selected employees stock options in the company. This acts as motivation for the employees to make a long-term commitment to the company. Employee Stock Option Plans are considered effective because it allows the employee to have ownership interest within the company.

A company may choose to offer its chosen employees these stock options based on length of service or performance. An employee who is a top performer and contributes well to the company is an employee worth keeping around. Good talent is hard to come by and if you want to keep them around, they need an incentive. This incentive should be something in addition to the benefits laid out in their existing contract.

The selected employee can purchase ownership shares in the company at a predetermined rate.

 

Why You Should Consider an ESOP for Your Employees

When an employee feels like they are being valued in the company, they are compelled to stick around for longer. It is considered a strategy that delivers fair value to its shareholders. It attracts top talent to your company and keeps them motivated to stay on.

It is not only the employees who stand to benefit from this arrangement either. An Employee Stock Option Plan in Hong Kong can include consultants, directors, or consultants too. It is a practical strategy because it is similar to dealing with the sale of securities. This type of activity is usually regulated under the Companies (Winding-Up and Miscellaneous) Ordinance (Cap. 32).

 

Tax Levies

There are no taxes levied on this type of stock option plan. Salaries taxes still apply to the employee’s exercise of the plan’s option. Both the employee and employee will need to report this to the Inland Revenue Department, but ESOP does not count as relevant income.