0 / 30 SavedReset
SECTION 2 · 8 ITEMS
Documentation
The plan, the grant, and their interaction with the rest of the cap table. Vague plans cause litigation; vague grants destroy trust.
09 ESOP master plan document Comprehensive plan covering eligibility, vesting, exercise mechanics, termination, leaver classification, and amendment procedure. Approved by Board + shareholder resolution.
10 Individual grant agreement Per-grant document referencing the master plan. Specifies: number of options, strike price, vesting schedule, cliff, post-termination exercise window.
11 Anti-dilution interaction Specify whether the pool refreshes on each financing round and how. Most VC term sheets require the pool be sized BEFORE the round at the company’s cost (existing shareholders dilute).
12 Share class and treasury management ESOP shares typically a separate class with no voting rights, or non-voting common. Treasury-share vs new-issuance model — pick one and stick with it.
13 Dilution waterfall model Maintain a cap-table model showing fully-diluted ownership at each stage. Founders systematically underestimate dilution; the model corrects this.
14 Board consent records Each grant must have a board resolution or board-committee minute referenced. Missing consents are the #1 finding in VC due diligence.
15 Anonim Şirket Article 387 compliance For Turkish JSC, conditional capital increase mechanism (TTK Art. 463–466) is the cleanest pathway. Implementing this requires articles of association amendment.
16 Independent valuation (409A / Article 343) US 409A valuation if Delaware entity; Turkish Article 343 mechanism for non-listed JSC. Annual refresh standard, or after material events.
SECTION 4 · 6 ITEMS
Communication and Exit
An ESOP only motivates if employees understand it. Documentation alone is not communication.
25 Onboarding deck and grant letter First-day comms covering: how the plan works, what it is and isn’t worth, vesting mechanics, exercise mechanics, what happens on leaving.
26 Quarterly valuation communication Communicate fully-diluted share value at each valuation event so employees track their grant value in real time. Avoid surprise on exit.
27 Liquidity event preparation Pre-acquisition or pre-IPO: lawyer + tax advisor walks employees through their personal tax outcome. Spreadsheet per employee with worst/middle/best case.
28 ROFR and transfer restrictions Right of first refusal on vested-exercised shares. Transfer restrictions during lockup, around financing events, and at exit.
29 Secondary sale program Periodic secondary offerings let employees take partial liquidity before exit. Reduces dry-tax pressure and improves retention.
30 Annual review and plan amendment Pool size, vesting norms, valuation refresh, eligibility scope, market benchmarking. Document each annual review and any amendment.
Decision Matrix — Is Our ESOP Sound?
How your checked items distribute shows your ESOP maturity:
Section 1 7+/8: Decision framework clear. No structural error.Section 2 7+/8: Documentation complete. Ready for VC DD and M&A.Section 3 7+/8: Tax-compliance structure sound. Dry-tax risk minimized.Section 4 4+/6: Communication and liquidity preparation functioning.Section 1-2 weak: Plan still nascent — redesign with advisor required.Section 3 weak, tax unplanned: Dry-tax risk high — liquidity preparation critical.Section 4 weak: ESOP not motivating — communication gap destroys value.All four sections above threshold: ESOP maturity at upper range. Lock in annual review procedure.
Legal notice. This document is for informational purposes only and does not constitute legal advice. The Turkish Commercial Code, Income Tax Law, KVKK and other legislation referenced are general references; applying them to your company requires evaluation by a lawyer and tax advisor. Vircon Legal:
[email protected]
