Opinions

The following section uses response from those in the high technology industry in Europe or the USA. A total of 17 responses were used. 14 considered themselves start-ups, 3 considered themselves as a SME. There were 13 responses from Europe and 4 from the USA. The questions used a Likert scale degrees of agreement scale.

There was strong consensus among respondents that incentive plans are great to motivate employees. Out of all 17 responses, over three fourths either agreed or strongly agreed. Two responses were in strong disagreement with the statement. This is surprising that there were two strongly disagreeing statements, as the core driving factor selected previously to implement ESOPs was motivation.

When asked if they perceived employees working harder when ESOs are on the table, 53% (7) of European respondents agreed, 47% (6) were neutral. This is a stark difference from the 25% (1) of American responses that agreed, 25% (1) disagreed and 50% (2) were neutral. This suggests that the American respondents possibly had a more pessimistic view of work effort given by employees.

Figure 18. Results of “Employees work harder when there’s options on the table”.

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In European respondents, there were similar answers regarding promoting employees work motivation; however, the answers for “salary alone should be enough to motivate employees to work hard” drew different conclusions.

Figure 19. Results from “Salary alone should be enough to motivate employees to work hard”.

One could assume, based on the general consensus of European respondents being that ESOs promote employees to work harder, that there would be a skew towards disagreement with this statement. However, Figure 19 shows over 50% of European responses either agreed or were neutral. Whereas for the USA responses, it was not surprising that 50% agreed with the statement.

More than half of European respondents believe that ESOs should be available for all employees.

Still, the largest group opposing was founder / co-founders in Europe. It was surprising to see that investors / board members all believed ESOs should be granted for everyone. This could derive from the fact that they are not invested in day to day activities in the company could affect their opinions. There was a total of: 12 founders / co-founders, three management / executives, one investor and board member. Figure 20 illustrates the results from “stock options should be available to all employees regardless of their position in the company”.

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3 3 3 3

2

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0 1 2 3 4

Strongly Agree

Agree Neutral Disagree Strongly disagree

Number of Responses

Europe USA

Figure 20. Results of “Stock options should be available to all employees regardless of their position in the company” by position of respondent.

Management also believed they should be available for everyone. Founders / co-founders’

opinions were the only ones that differed. This could be from how they perceive “giving away” their company negatively affects how they view ESOs.

Literature suggests that ESOs are useful for companies that have liquidity issues due to the possibility that ESOs might never gain worth. When asked from respondents, the results varied.

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5

3 3

1

1

1 1

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0 1 2 3 4 5 6 7 8

Strongly agree

Agree Neutral Disagree

Responses Board Member

Investor

Management / Executive Founder / Co-Founder

Figure 21. Results of “The possibility that some employee stock options might never be valuable or exercised makes them a useful tool for start-ups” by geographical location.

There was a skew for American responses towards agreeing with that statement. This characteristic of ESOs makes them valuable and a flexible commitment for companies. When asked in the additional comment section, one respondent replied, “They are a lottery ticket and should be explained to employees as such”. In Europe, there was not such an inclination to implement ESOs due to this factor, but it could be that those who replied did not fully understand the flexibility ESOs can bring.

Additional comments from respondents were:

- Stock ownership programs where employees are committing their own money work better than option programs.

- People are intrinsically motivated and don’t require money or equity to be motivated to succeed. Offering someone ownership changes their sense of status, and rewards taking risks. It is a tool to help people feel comfortable that they are investing their time in something of value. These are important attitudes but, in my experience, bear little on

“motivation”.

- It's important to remind employees of the link between their achievements and the value of the stock options.

- It’s great for early employees and management, less important for employee number 150+.

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The additional comments highlighted that the key for any plan to work is to communicate with employees exactly what they are receiving. Overall, all respondents believed the benefits of employing ESOs in motivation and employee well-being made ESOPs worthwhile, regardless of location and position in the company. ESOPs are the prevalent form of employee equity programs;

however, goals of incentive plans should be identified, and the appropriate solutions chosen.

5 CONCLUSION

The main objective of this thesis was to examine employee stock option programs today and how they are specifically employed in start-ups operating in the high technology industry. Theoretical research was done to answer how ESOPs are implemented and valued today, the prevalence in the high technology start-ups, and how firm valuation is affected by them. Empirical qualitative research was done to determine the main reason to implement an ESOP, the opinions management / board members have of them, and characteristics of plans currently being implemented in high technology start-ups.