The notion of notional values — P4
Making this work in the UK
CrowdEmotion lives at the intersection of people and technology. This four part blog series explores our considerations around equity based motivations to drive innovation through diversity and collaboration in the UK tax system.
Part 1: What is an options scheme?
Part 2: How should our share options work?
Part 3: Our Ideal Equity Program…for now
Part 4: Making this work within the UK
Disclaimer: I am a business owner and not an accredited legal for financial advisor. All opinions are my own and I cannot be held accountable for action taken against them.
4/ Making this work within the UK
Impact of country schemes on your ideal model
As a North American, I had a little bit of a shock in how to setup a good scheme here. By example, our programme is similar to a Salary Sacrifice type of vehicle which drives a heavily collegiate atmosphere.
That hits grey areas in equity assignment and taxation events in the UK so we ended up offering an Employee Management Incentive scheme while tracking non-cash, earned contribution value to assign options at a regular interval.
However, it was only possible by doing two things…
Step 1: get a good lawyer and/or accountant
Work closely with a firm familiar with share option schemes to insure everything meets compliance. Where equity is transferred, you can be sure that the tax body has something to say about it.
Our lawyer is Dan Tozer at Harbottle & Lewis — highly recommend.
Step 2: have the lawyers write a plain english version for your team
Share options are complicated even for the savvy. Work with your lawyers to write up a clear, concise overview for your team on what their equity and motivation options are. This will help make the conversation easier and provide a first guide to how you operate making their lives simpler.
Most importantly, always refer team members to third party counsel.
So far, every employee has bought into our company and/or taken contribution value in share options. We track the value together when assessing investor fundraising vs sales priorities, business opportunities, and other equity related matters.
As the company continues to grow, we continue to stress the model in different ways. That said, in near four years, it holds true to our core values around providing individuality with a motivation to collaborate.
I hope you found this useful. Every company is different and the simple exercise of answering some of these questions can unveil a lot about your employees methods for making decisions, risk propensities, and value drivers for motivation.
About Me:
The benefit of being 33 and starting a company after 10 years in corporate life is you understand the receiving end of things like share options and buying into private companies. To add to the fun, I am Canadian having worked in a North American (NA) style tech startup. I decided to start my company in the UK with a Canadian culture… under UK tax guidelines. Square peg <> round hole.
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M
