Employee Incentive Programmes In Start-Ups
Published date | 24 January 2024 |
Subject Matter | Employment and HR, Employee Benefits & Compensation, Employee Rights/ Labour Relations |
Law Firm | Schoenherr Attorneys at Law |
Author | Mr Niklas Kerschbaumer and Dominik Tyrybon |
Well-designed employee incentive programmes are crucial for start-ups seeking to build a motivated and committed workforce. These programmes not only attract top talent but also help motivate and retain the key individuals critical to a start-up's growth. While there are various employee incentive programmes, a notable distinction often arises between real and virtual share programmes. In Austria, virtual share programmes have gained prominence, largely owing to their tax advantages over real share programmes. A new development in the Austrian corporate landscape is "company value shares" (CVS), which may only be issued by the new corporate form called the "Flexible Company" (FlexCo).
Real Shares: Real shares, also known as equity or stock, confer actual ownership in the company to employees. Employees with real shares typically enjoy voting rights in shareholder meetings, potentially influencing critical decisions. Real shares also come with administrative complexities, as notarial deeds are required for their issuance and transfer.
Virtual Shares: Virtual shares, or phantom shares, have become a popular choice in Austria, mostly thanks to their tax advantages compared to real share and other employee incentive programmes. Virtual shares do not represent actual ownership in the company but rather a synthetic form of equity. Holders of virtual shares receive financial benefits (usually cash payments) from the company as if they held real shares. These programmes offer flexibility and simplicity compared to real shares. Employees holding virtual shares...
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