LEXR’s Post

ESOP vs. PSOP: What’s best for your startup? Stock options plans are a great way to attract and retain top talent - but should you offer real shares (ESOP) or phantom shares (PSOP)? 🤔 Here’s the key difference: 👉 ESOP (Employee Stock Option Plan) Employees become actual shareholders with voting rights and financial benefits. They get shares (often at a discount), but the setup is complex, and taxation can be tricky. 👉 PSOP (Phantom Stock Option Plan) Employees don’t receive real shares but gain a contractual right to participate in the company’s exit or dividends - without shareholder rights. It’s easier to implement but offers a weaker retention effect. 💡 Best practice from my experience: Set up an ESOP or PSOP with your first financing round to align incentives early. In future episodes, we will look at each of these plans individually in more details. Got questions or need advice? Check out our FREE guide here (https://shorturl.at/Oyd3n) or drop me a DM. 📩 Next week in Episode 32, we will take a first look at AI compliance and what you should be aware when implementing AI-powered solutions in your services. #FridayForFounders