Low wages, lots of overtime: Working in a startup often only really pays off through employee participation programs. Getty Images
1. What is ESOP?
ESOP stands for Employee Stock Ownership Plan. What is meant is a contractually regulated program in which employees participate financially in the company’s success – in this case through shares in a company. ESOP programs are particularly popular in start-ups: Firstly, highly qualified specialists can also be recruited at low wages. Second, employees can benefit greatly from the appreciation of a fast-growing tech company. For example, if the company’s valuation increases as a result of one or more financing rounds, the shares also increase in value. If the startup is later sold or goes public (exit), employees can earn really well from it.
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2. I heard there is also VSOP. is this the same
Generally, yes. But: With VSOP are Virtual Stock Ownership Plans meaning virtual employee participation programs. These are even the most common in the German startup scene. With this model, employees do not receive any “real” shares in a GmbH, but only option rights that are contractually regulated and, so to speak, “virtually” recorded in software. Only when an exit event actually occurs (company sale or IPO) are the shares finally allocated. This “crutch” is used to premature tax payments to avoid (Dry-Income-Problem). Note: When ESOP is mentioned in a startup, VSOP is usually meant in this country. However, both terms are often used interchangeably in the scene.