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A Stock Option Plan lets companies give their employees the right to buy company shares at a set price in the future. It's a popular way for Kiwi businesses, especially growing tech firms, to attract and keep talented staff while preserving cash flow in their early stages.

Under New Zealand's Financial Markets Conduct Act, these plans must follow specific rules about disclosure and fair trading. The plan typically sets out when employees can exercise their options, how long they must wait (called vesting), and what happens if they leave the company. Most plans run for 5-10 years and require board and shareholder approval before implementation.

A Stock Option Plan works best when your company needs to attract top talent but can't match the high salaries offered by larger competitors. It's particularly valuable for New Zealand startups and growth-phase companies looking to preserve cash while building their team's long-term commitment.

Consider implementing one during key growth phases: when expanding into new markets, preparing for a capital raise, or competing for specialized talent in tech or innovation sectors. The plan becomes especially powerful when combined with clear performance targets and vesting schedules that align with your company's strategic milestones under the Financial Markets Conduct Act framework.

• Traditional Options: Basic plans giving employees the right to buy shares at today's price after a set waiting period, commonly used by established NZ companies
• Performance-Based Options: Vesting tied to specific company or individual targets, popular in sales-driven organizations
• Time-Based Vesting: Options that unlock gradually over 3-5 years, helping retain key staff through growth phases
• Executive Plans: Specialized options with longer vesting periods and larger allocations for senior leadership
• Growth Shares: Options that only become valuable when the company exceeds set performance thresholds, common in startups

• Company Board: Approves and oversees the Stock Option Plan, setting overall allocation limits and key terms
• HR Managers: Administers the plan day-to-day, handling employee communications and tracking vesting schedules
• Legal Counsel: Drafts plan documents, ensures compliance with NZ securities laws, and reviews annual reporting
• Eligible Employees: Receive and exercise options according to plan rules and vesting conditions
• Share Registry Provider: Maintains option records and processes exercises when employees convert options to shares

• Company Details: Gather current share structure, total shares authorized, and available pool for options
• Eligibility Rules: Define which employees qualify and any performance conditions for vesting
• Financial Terms: Set exercise price, vesting schedule, and expiry periods that align with NZ market standards
• Board Approval: Prepare board resolution authorizing the plan and total option pool size
• Documentation: Our platform generates compliant Stock Option Plan documents, ensuring all required elements meet Financial Markets Conduct Act requirements
• Implementation Plan: Create communication strategy and tracking system for option grants and exercises

• Plan Overview: Clear statement of purpose, eligibility criteria, and total shares reserved for options
• Grant Terms: Exercise price calculation method, vesting schedule, and expiration periods
• Vesting Rules: Detailed conditions for option vesting and any acceleration provisions
• Exercise Process: Steps for converting options to shares, payment methods, and tax implications
• Termination Provisions: Treatment of options when employment ends under various scenarios
• Corporate Events: Rules for handling mergers, IPOs, or company restructuring
• Administration: Board powers, record-keeping requirements, and amendment procedures

A Stock Option Plan often gets confused with an Equity Incentive Plan, but they serve different purposes in New Zealand's corporate landscape. Here are the key differences:

• Scope: Stock Option Plans focus specifically on share options, while Equity Incentive Plans can include multiple types of awards like restricted stock, performance shares, and stock appreciation rights
• Flexibility: Equity Incentive Plans offer more flexibility in reward structures and can be adjusted based on market conditions or company performance
• Tax Treatment: Each plan type faces different tax implications under NZ law, particularly regarding the timing of tax obligations
• Administration: Stock Option Plans typically have simpler administration requirements, while Equity Incentive Plans need more complex tracking and reporting systems
• Target Recipients: Stock Option Plans are often used for all employees, while Equity Incentive Plans typically target key executives and high-performers