First and foremost as a founder you need to work with a lawyer to create an ESOP scheme document. This scheme document clearly defines how the scheme is going to be administered in your company. Typically this is done by Founder- Directors in an early-stage startup. The scheme document also defines the regular exercise period (ex. 10 years), what happens when an employee leaves (he may be asked to exercise within a shorter period), what happens when an employee is terminated, default vesting schedule (ex. 1-year cliff, quarterly vesting for 4 years) and so on. Once the scheme document is finalized, by the lawyer and founders, it needs to be approved by a shareholders’ resolution. Now you are ready to grant ESOP to employees.
Click here for our detailed blog on rolling out ESOPs!