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Generate your ESOP with Clara

Build and manage your ESOP, from start to finish, making the process easy for you and your team.

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ESOP
in minutes

Complete the process digitally in a few clicks

Automated vesting schedules

Every time you issue a grant, the vesting schedule will automatically appear on your cap table

Built-in
exercise notices

You'll be reminded of upcoming vesting dates and Clara will pre-populate exercise notices - ready to sign by your team members

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Easy
onboarding

Make ESOP allocation a seamless part of your onboarding process. Generate grants for
new team members
in a few clicks

Get your free 14 days trial
for our ESOP feature

An introduction to ESOPs

ESOP stands for Employee Share Option Plan. On Clara, the ESOP documents
comprise a Share Incentive Plan and a Grant Agreement

What are Share Incentive Plans and Grant Agreements?

The plan sets aside a pool of share options that you can allocate to employees, directors, advisors and consultants. Once your plan is in place, you can issue Grant Agreements to allocate options from your plan’s pool to team members.  

Why have an ESOP?

An ESOP allows you to attract talent, incentivise your team to contribute to your startup’s success and retain them through time-based vesting (these are the 3 key pillars of ESOP – attract, align and retain). An ESOP can also be used for consultants and advisors, not just employees.

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How to put in place your ESOP

Login

Login into your account (or sign-up, if you don't have one)

Generate your Share Incentive Plan

Go to the Generate Documents tab, choose International from the dropdown and select Share Incentive Plan

Complete the form

Complete each field in the form and select your various options, including the pool of shares you want to set aside for your ESOP

esop plan

Adopt the Share Incentive Plan

Once you generate the plan, you can save it in draft, edit it and when final, send it for signature through our built-in DocuSign integration. It will be signed by way of a board resolution adopting the plan (the actual plan itself is not signed). Clara will take care of all that for you

Repeat for Grant Agreement

Now that your plan is in place and ESOP pool set aside, you can start issuing options to team members. Just go back to the Generate Documents tab, select Grant Agreement, complete the form and sign it when you're ready

Arrange for exercise notices

Clara will automatically remind you when an upcoming vesting date is near and pre-populate an exercise notice ready for your team member to sign and send back to you, right on the platform

Common questions asked about ESOPs

You’ll want to put in place an ESOP so that you can attract, incentivise and retain team members, and empower them as part owners aligned with the interests of your startup. Given that working for a startup is risky and the cash portion of the pay is often lower than traditional jobs, this can be a key tool in getting the right talent onboard.

Every situation is different. It generally makes sense to have one as soon as you feel you need to start attracting talent and hiring and growing your team.

This depends on how you choose to structure your ESOP and there are important tax implications both for your startup and for your team members, so please always obtain professional tax advice (and your team members should too). However, it is common for some payment to be made, either based on the fair market value of your startup at the time the grant of options was made – more typical for jurisdictions with tax – or at the very least the par value of the shares (a small nominal amount that is typically between US$0.001 to US$0.00001 depending on the jurisdiction) as this is usually a legal requirement – more typical for low or no tax jurisdictions.

While they hold only the options, their only rights will be the right to exercise the options as they vest and receive the corresponding shares. Once they become shareholders, the rights they have will depend on how you choose to structure your ESOP. It’s not uncommon to give very little rights, including no voting rights, as the main purpose of the ESOP is to provide economic incentives and not governance rights.

If you sell your startup while options remain outstanding subject to vesting, you have to look at your “acceleration” provisions. The most typical ones are “single-trigger acceleration” which immediately accelerates all vesting so that your team members take all their shares immediately prior to the sale and can sell them at the same time as the sale or “double-trigger acceleration” which means that a team member’s vesting schedule continues as is under the new buyer and would only accelerate if their engagement with the startup is terminated as part of the sale or within a period of time after (typically between 6 to 12 months).

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Common questions asked about
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