Growth Shares: Incentivize & tie-in key managers.
Attracting, motivating and retaining key staff is a primary aim for most tech and other business owners. As part of their remuneration package, allowing such staff to invest in growth shares in the company is a useful tool to achieve this.
Growth shares are a separate class of equity, with specific restricted rights. They only obtain real capital value if the business financial performance improves. Business founders and other existing equity holders do not therefore dilute their stake in what the business is already worth, although they maintain a lessor stake in the future growth this key manager is able to create.
The growth share rights to vote at general meetings and participate in dividends can be restricted as you see fit.
Blog entries by: Ian Piper.