Transferwise Limited

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How a fast growing technology company has successively used share options to reward its employees.

TransferWise is a UK based but internationally operating company, funded via venture capital and rapidly expanding, it provides peer to peer foreign exchange.

Why Employee Ownership?

The Company has always placed a very high degree of importance on medium to long term employee reward through share options. Through their options, employees will be rewarded by growth in the Company’s share value.  In other words, the better the Company does, the greater their eventual reward will be.

Both in the UK and their other locations, the granting of share options enables the Company to reward its employees in a way which relieves pressure on cashflow, and in instances, use statutory tax advantages to reduce the eventual tax bill for both employees and the Company.

How did we help TransferWise achieve its objectives?

Together with Transferwise we designed and implemented an EMI option plan which allowed participating UK employees to be granted options to acquire shares in the Company, in the future, paying a price based on value at the time of option grant.  The objective behind making them EMI options is that the tax the employees will eventually pay on their option gains will be capital gains tax, potentially at a rate of 10%, rather than at their higher income tax rate.

What did our work entail?

  • Being on hand throughout the process to explain to the Company and its employees clearly and concisely what its next steps, decisions and choices were.
  • Ensuring that the terms of the options remained true to the Company’s objectives (for example: when should the options become exercisable and what happens if an optionholder leaves?)
  • Creating detailed individual option awardee packs that clearly and accurately recorded their personal option agreements.
  • Securing HMRC agreement to share valuation before each option grant, thus ensuring that there is no scope for subsequent argument as to share value at a later point in time.
  • Explaining how the options work, so that optionholders understand the option plan and its potential benefit to them.
  • We registered the new scheme with HMRC and ensured accurate record keeping protocols were created.

As a result of its continued growth, TransferWise is now too large to be eligible to grant further EMI options, so we have helped the Company put in place a Company Share Option Plan (CSOP) as an alternative.

We also worked with TransferWise advisers in the USA and Estonia to secure use of similar statutory tax advantages for its employees based in those countries.

Benefits for the Company

TransferWise’s share option plan has allowed its employees to participate in the rapid expansion and enjoy the success of the Company, which has contributed to securing a committed and engaged workforce who are looking towards the future.

If you would like to explore how employee ownership or an employee share scheme might be introduced in your company, please contact us for an initial discussion.

We are happy to meet at our offices without charge or commitment and will be very pleased to hear from you.