An employee share scheme, or ESS for short, is a plan under which shares (or rights to acquire a beneficial interest in shares) are provided to employees. Employee share schemes can be set up to bolster an employee’s base remuneration package, or they can be tailored as an incentive to achieve a specific performance target in the short or long-term, or they can be a combination of the two.

Everyone knows the importance of signing and keeping key personnel. Employee share schemes can make a current or prospective employee’s remuneration package more attractive in a way that does not restrict a business cashflow in the same way a standard pay increase would. Additionally, enabling an employee to participate in the long-term growth of the business incentivises them to act in the long-term interests of the company, thereby mitigating the all too familiar principal-agent problem.