Implementing a Fintech's Employee Share Ownership Plan (ESOP)

Client 

Our client, Miden Inc (DBA Tyrus Tech//YC W24), is a fintech company that offers a payment solution platform that enables businesses to accept and process payments securely and swiftly using cutting-edge techniques and through a single integration of its payment platform. The client drives economic digitization by offering businesses resources for growth, including payment solutions, financial tools, and real-time support, that fosters business expansion. 

Problem

The client aimed to enhance employee retention and align their interests with the company's long-term success by offering ownership stakes in the business. This initiative was designed to motivate employees to remain with the company and contribute to its growth, ensuring that their compensation would increase in tandem with the company’s performance.

Approach

To achieve our client’s desired objective, we designed, structured and set up the client’s Employee Share Ownership Plan (ESOP). Setting up the client’s ESOP involved several steps that required legal and administrative expertise, which included the following steps:

1. ESOP Design and Plan Structure: We helped the client define the eligibility criteria to determine which employees will be eligible to participate in the plan. We also created a vesting schedule that outlined how long employees must remain with the company to gain full ownership of their share options. In line with best industry practice, we advised the client on the percentage of shares to be set aside for the ESOP and determine how many shares will be allocated over time.‍
2. Legal Compliance: We prepared the ESOP policy document that would govern how the ESOP would be administered and managed, the letters of grant to be issued to the employees, and the share option agreement which confirms that the employee agrees to be bound by the terms and conditions of the ESOP. We also advised the client of the approval required of the company’s board of directors and shareholders regarding the ESOP structure.  ‍
3. Employee Communication and Education: We informed the employees about the ESOP, including how they benefit, how the shares are allocated, the vesting schedule, and what it means for their long-term financial outlook. We also ensured that the employees understood the relationship between the company’s performance and the value of their shares.‍
4. Administration and Ongoing Management: We advised the client on setting up systems to manage the allocation of shares, employee participation, record keeping, and distribution of shares upon employee exit.

Result 

We successfully implemented the client’s ESOP by offering its employees the opportunity to build meaningful wealth through their ownership stakes in the company, which would more likely make them work harder and take greater responsibility for the company’s success, leading to increased productivity and improved performance across the board.

Acelera Law has been helpful with many of our legal needs. They have assisted us with the creation and implementation of ESOPs, supported us in raising financing, and assisted us in our day-to-day activities. 
- Dom Okiemuta, Cofounder