VESOP - virtual employee stock option plan, also known as "phantom stock" or "virtual shares" is an employee participation model, implemented over blockchain.
As the name indicates, VESOP enables employers to "virtually" distribute shares to their employees. Once the conditions for the payout are met (e.g. company sale, IPO, etc.), employees can benefit from company success. Simply put, virtual shares represent a "replicating" stock option plan: by issuing virtual employee shares, a contract is created over blockchain with all the documentation and signatures being recorded digitally.
VESOP can be used by a variety of companies, but for startups that are limited on resources (especially in the early stages of funding) it offers the opportunity to stay liquid, while hiring qualified employees, attracting experienced advisors, and other stakeholders. Business owners who are looking to align company growth with employee interests can use virtual shares as a recognition of personal performance and incentive for further projects.
The main advantages of VESOP are:
- assign virtual shares to a larger number of stakeholders with fewer constraints
- lower in complexity, legal hurdles, and tax structure for employers and employees
- more flexible and less expensive set up
However, there are also disadvantages to consider:
- lower impact as employees are only involved in an "abstract" way
- regular share valuations required
Are you looking for an employee stock option program? iVE.ONE offers a VESOP management platform