ESOP/VSOP: Why the size of the shares is not that important

Easy Esop experts: Kolja Czudnochowski and Dr. Christopher Hahn Collage: Dominik Schmitt with photo from ESOP Direkt

How is the value of my employee shareholding determined? One might initially think that it is due to the size of the investment, i.e. the number of shares, and the selling price of the company. However, there is a third factor that ultimately determines whether and how much a beneficiary will receive in the event of an exit.

About the “Easy ESOP” authors:

The authors Kolja Czudnochowski and Christopher Hahn deal with the entrepreneurial, corporate law and tax law opportunities and challenges of employee participation. They have in common with ESOP Direct also founded a company that supports startups and SMEs in their implementation. On Gründerszene they regularly explain various aspects of ESOPs and VSOPs.

Kolya Chudnokhovsky is a (serial) entrepreneur, angel investor and co-founder of ESOP-Direkt. Concepts for fair and economically attractive incentives for employees were close to his heart early on. When introducing our own participation programs, he observed that inadequate advice, a lack of transparency and serious errors in the implementation of participation programs were no exception. At ESOP-Direkt he is responsible for the further development of the project and its offerings and is in close contact with startups and SMEs.

Dr. Christopher Hahn is a founding partner of trustberg, lawyer, business angel and co-founder of ESOP-Direkt. As a lawyer, he focuses on corporate law, M&A and venture capital. Christopher Hahn has been an expert in the field of employee participation for several years and, among other things, wrote the standard work “Virtual Employee Participation” for Springer Gabler. At ESOP-Direkt he is responsible for corporate development and the design of the investment programs.

For modern companies, employee share ownership in the form of ESOP or VSOP is an effective means of attracting, retaining and motivating talented and experienced employees. This is primarily done by making them “co-shareholders” in order to achieve common goals: maximizing the company’s value for a possible sale – or striving to maximize profits for a possible profit distribution.

So far so good. Ideally, if an exit occurs, everyone involved will be happy. In reality, however, the joy usually varies in intensity because, despite an objectively successful sale, not all employees necessarily receive the same amount. What’s behind it?

The base price is crucial

Related

Prime Minister Nikol Pashinyan with his wife Anna Hakobyan attended the opening of the 10th Jubilee Festival of Rural Life and Traditions, which is being held this year in Dzoraghbyur settlement of Kotayk region, the government reports.

The message states:

“Deputy Minister of Economy Arman Khojoyan, Governor of Kotayk Aharon Sahakyan and others were also present at the event.

Welcoming the attendees, the Prime Minister noted why the Government is interested in such events.

“You know, in Armenia, as a rule, the word agriculture is mainly associated with the word suffering. And we constantly hear and see that our dear villagers, putting a lot of physical work and nerves, eventually face further problems and cannot get out of that cycle.

What is our policy in this area? We want to do our best to associate agriculture with the concepts of efficiency, well-being, aesthetics, health and a healthy lifestyle.

Such events are important for us because many countries of the world have given the answer to these questions. In the field of agriculture, although we have certain islands where these concepts are combined, unfortunately, this is not yet a widespread phenomenon in the Republic of Armenia.

And with such events and scenes, we try to emphasize this agenda and re-emphasize that there is nothing dishonorable about learning for any of us. For example, I learn all kinds of things on purpose, because I know that I either don’t know it, or I don’t know it well. Even Socrates, one of the most famous philosophers in the history of the world, said: I know that I know nothing. There is no shame in any of us saying, I know I don’t know much, and therefore if I don’t know much, what am I to do, I am to go after that knowledge.

And the Government’s goal is, firstly, to encourage this perception among our citizens, and secondly, to create opportunities, conditions, because there may be many citizens who want to fill in what they don’t know, but there are no opportunities, no infrastructure, no platforms for that. And the existence of such platforms is extremely important for us. We have contradictions and contradictions in the country today. On the one hand, our Agrarian University, unfortunately, does not arouse much interest among students, on the other hand, many of our farms in the field of intensive horticulture invite agronomists from Europe with a salary of 700-800 euros per hour, and in many cases they pay this much for online work.

I want to welcome this meeting because I also talked about health. We often fail to see the connection between our population’s health problems and agriculture. You see, the perception that the more fertilizer we give, the bigger and more it will be, can happen physically, but it has consequences. And in the modern world there are trends to develop organic agriculture, healthy agriculture. And food safety is also a problem for us,” said the Prime Minister, adding that we have serious problems here.

According to Nikol Pashinyan, this cannot be the problem of the peasant, the citizen, the government, the opposition separately. This belongs to all of us, because that product from our markets and shops goes to everyone’s homes, both oppositionists and supporters of the government, and neutrals, both politicized and non-politicized. Therefore, these are global problems, and our attention to them is not enough.

“Next, the suffering part. it is very important that modern gardens are not only a place of work, but also a place of rest, because when a person sees the aesthetic image of his work, it gives him new energy, of course in combination with income. For many years, we in the Ministry of Economy have been putting the problem before our colleagues in the field of agriculture, that every farmer knows the cost price of his harvest, knows all the information. Because the issue comes to procurement and we are discussing different prices, we do not know what these prices are compared to. When we have clear formulas for calculating costs, we will know whether the price offered for procurement is too much or too little, how much profit margin there is in it, how much the Government will help. And they are important for the Government, because with many of our support programs, money is spent, but we see that there are not great results from it. At the moment we are solving some problem, we passed it, we passed it, next year we know we will face the same problem.

Today is first of all a holiday, but a holiday is also a meeting, a holiday is also a conversation, a holiday is also an exchange of experiences. And I want to believe that with such events, our public perceptions of modern methods and forms of agriculture increase, and I attach great importance to children seeing this,” said Nikol Pashinyan.

The Prime Minister added that children in schools should be involved in the improvement of the territory, land should not only be cultivated, but cultivated with modern knowledge, so that it is not an exploitation of the child’s physical strength, but also a process of preparing the child for his future life. “After all, they study botany in schools. We also create a small greenhouse section in schools.

This is a very important direction because intensive agriculture is not just about tilling the soil, it is about ways of thinking. We should not change our ways of thinking, but renew them, because the world is changing. Thinking is also a plan.

I congratulate all of us and wish all farms and farmers of Armenia more and more abundant harvests and productive work,” said the Prime Minister.

The goal of the annual harvest festival is to contribute to the development of sustainable agriculture and rural communities in Armenia through positive change.

The festival is a unique platform where farmers, producers, processors, buyers and various organizations and potential investors meet to share experiences, collaborate and find new markets. Around 200 farmers and farmer groups participate in the festival every year.

The festival is accompanied by a traditional concert program with the participation of popular singers, musicians and small cultural groups, entertainment performances and performances for children, performances and dance numbers.

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