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An Equity Incentive Plan lets Filipino companies reward key employees with company shares or stock options instead of just cash. Companies use these plans to attract talent, boost performance, and help staff feel more invested in the company's success. These plans follow Philippine Securities and Exchange Commission guidelines and the Corporation Code.

The plan outlines who can receive equity awards, how many shares are available, vesting schedules, and exercise prices. It typically includes stock options, restricted stock units, or performance shares that employees can earn over time. This approach helps growing companies preserve cash while giving employees a chance to build wealth as the company grows.

Consider implementing an Equity Incentive Plan when your Philippine company needs to attract or retain top talent without draining cash reserves. This strategy works especially well for startups and growth-stage companies competing with larger firms for skilled professionals, or when preparing for future fundraising rounds or IPO plans.

The plan becomes crucial during key business moments: launching new ventures, expanding operations, or when facing high employee turnover due to competitive salary offers. It's particularly valuable for tech companies, professional services firms, and innovative businesses where talent directly drives company growth and where immediate cash compensation might strain resources.

• Stock Options Plan: Gives employees the right to buy company shares at a fixed price, usually vesting over 3-5 years. Popular with tech startups.
• Restricted Stock Units (RSU): Grants actual shares that vest over time, with fewer tax complications than options. Common in established companies.
• Performance Share Plan: Links equity rewards to specific company or individual goals. Ideal for executive compensation.
• Employee Stock Purchase Plan: Allows staff to buy company shares at a discount through salary deductions. Works well for publicly listed Philippine firms.
• Phantom Stock Plan: Provides cash bonuses based on share value increases without actual stock transfer. Used when share issuance is restricted.

• Board of Directors: Approves and oversees the Equity Incentive Plan, sets overall allocation limits, and ensures compliance with SEC regulations.
• Corporate Secretary: Maintains plan documentation, tracks share allocations, and handles regulatory filings.
• HR Department: Administers the plan day-to-day, communicates with eligible employees, and manages vesting schedules.
• Eligible Employees: Key personnel, executives, and high-performing staff who can receive equity awards under the plan.
• Legal Counsel: Drafts plan documents, ensures compliance with Philippine labor and securities laws, and advises on tax implications.

• Company Information: Gather authorized capital details, current shareholding structure, and SEC registration documents.
• Plan Parameters: Determine total shares allocated, eligible employee categories, and vesting schedules.
• Financial Data: Calculate fair market value of shares, exercise prices, and potential dilution impact.
• Performance Metrics: Define clear, measurable goals for performance-based awards.
• Tax Considerations: Review BIR guidelines on equity compensation and fringe benefits tax implications.
• Documentation: Use our platform to generate a compliant plan document that includes all required elements under Philippine law.

• Plan Purpose: Clear statement of objectives and intended beneficiaries under Philippine corporate law.
• Eligibility Criteria: Detailed qualification requirements and participant categories.
• Share Pool: Total number of shares reserved and maximum individual allocation limits.
• Award Types: Specific equity instruments offered (options, RSUs, etc.) and their terms.
• Vesting Schedule: Timeline and conditions for award maturity.
• Exercise Terms: Price determination, payment methods, and exercise windows.
• Termination Provisions: Rights and obligations upon employment ending.
• Administration: Board and committee powers, amendment procedures.

An Equity Incentive Plan differs significantly from a Stock Option Plan in several key aspects, though both involve employee equity participation. While a Stock Option Plan focuses specifically on share purchase rights, an Equity Incentive Plan offers a broader range of compensation tools and flexibility.

• Scope of Benefits: Equity Incentive Plans can include multiple award types (RSUs, performance shares, stock appreciation rights) while Stock Option Plans only deal with options to purchase shares.
• Flexibility: Equity Incentive Plans allow companies to adjust rewards based on performance metrics and market conditions, offering more customization options.
• Tax Treatment: Each type of award under an Equity Incentive Plan may have different tax implications under Philippine law, while Stock Option Plans follow a single tax treatment framework.
• Administrative Complexity: Equity Incentive Plans require more sophisticated tracking and management systems due to their diverse award types.