ESOPs: Unlocking the Future of Talent and Capital for Southeast Asian Startups

Let’s face it: building a startup isn’t just about pitching to investors or crafting the perfect product. It’s about putting together a dream team—and keeping that dream team engaged through every late-night pivot and weekend grind. So how do you incentivize people to stick with you through the chaos? Enter ESOPs (Employee Stock Ownership Plans)—your secret weapon to ensure your best talent has more than just a paycheck to care about.

While ESOPs are common practice in places like the U.S. and Singapore, Southeast Asia (SEA) startups face their own hurdles. Between patchy regulations, tax ambiguities, and a general lack of awareness, many founders are left scratching their heads about how to implement ESOPs that actually work.

Fear not. WOWS Global is here to break down the ESOP puzzle, provide practical solutions, and help your company keep its people invested—both mentally and financially.

ESOPs: Why You Need Them Now

In startup ecosystems, ESOPs are not just some fancy HR tactic—they’re critical for attracting and retaining top talent, especially in cash-strapped environments. Essentially, an ESOP grants employees a stake in the company, motivating them to contribute to its long-term success, while giving them a shot at future financial gain. Think of it as giving your team skin in the game.

And if you’re thinking ESOPs are just for Silicon Valley giants, think again. ESOPs are increasingly gaining traction across Asia. Companies like Indonesia’s Gojek and Singapore’s Grab have implemented ESOPs to incentivize their teams and foster a shared vision of success .

The Thailand Problem: Where's the Legal Framework?

Thailand’s regulatory landscape is far from straightforward when it comes to ESOPs. For a country with a thriving startup scene, the absence of clear ESOP guidelines is a massive roadblock. While the SEC’s PP-SME Program launched in 2020 to allow directors and employees in SMEs to own stock options, the uptake has been less than stellar . Only 89 companies have signed up as of late 2023, thanks to layers of reporting requirements and tax implications that discourage startups from jumping on board.

The tax system is a major sticking point. For Thai employees to own shares, the company has to issue a cash bonus that’s taxed as personal income—an expensive proposition for cash-tight startups. And even if employees manage to get shares, how and when those shares are taxed remains murky .

So, what’s the solution? Startups don’t need to wait for the government to untangle the red tape. They can take matters into their own hands with creative workarounds, like phantom stock options.

Virtual ESOPs: The Practical Solution for SEA Startups

At WOWS Global, we know how critical ESOPs are to the health of a startup. That’s why we’ve identified a simple but effective alternative for startups facing legal or financial roadblocks: virtual ESOPs. These phantom stock options simulate the economic benefits of real stock ownership without the regulatory headaches of actual shares.

With phantom stock, employees get the benefits of ownership—without adding complexity to your cap table. They receive a cash bonus when certain financial milestones are hit, like a liquidity event or a company sale. This not only motivates employees but also allows startups to stay nimble, keeping legal and administrative costs low .

Why ESOPs (or Phantom Stock) Are Key to Southeast Asia’s Growth

Southeast Asia’s startup ecosystem is on the rise, but growth without retaining top talent is a recipe for failure. ESOPs are a great tool to incentivize teams, but many founders struggle to navigate the complexities. Singapore, for instance, has become a shining example of how to get ESOPs right: no capital gains taxes on shares, flexibility in offering options to employees, consultants, and advisors, and the ability to create trust structures to manage share distribution .

While Southeast Asia is still catching up, founders don’t have to sit back and wait. The solution? Stay agile. Even if local regulations are slow to adapt, you can use tools like phantom stock or structured buybacks to ensure your team stays motivated. And as we’ve seen from success stories like Zomato in India, employees can become millionaires overnight when startups go public—if they’ve got the right ownership structure in place .

A WOWS Global Insight: The ESOP Game-Changer for Founders

Here’s the hard truth: managing an ESOP isn’t a “set it and forget it” task. If your cap table is a mess, if your options aren’t vested properly, or if your secondary sales aren’t handled with precision, you’re basically flying blind—and that can lead to catastrophe when you go for your next funding round.

WOWS Global isn’t just here to give you fancy tools; we’re here to help you create long-term value. Our ESOP services ensure that you can implement, manage, and grow an employee stock plan that works—while keeping your cap table in perfect shape. The right ESOP, combined with secondary liquidity options, means you’ll attract top talent and keep your company’s momentum strong.

Want to see how we can help? Schedule a meeting today, and let’s talk about building your team—and your future: 

Or check out our ESOP services page for more details:

Conclusion: ESOPs for the Win

Southeast Asia is buzzing with potential, but talent retention remains a key challenge. ESOPs (or virtual ESOPs) can turn that challenge into an opportunity. By offering employees a meaningful stake in your company, you not only attract the best and brightest—you inspire them to stay invested in your mission for the long haul.

Whether you’re a startup founder grappling with local regulations or an established business looking to scale, WOWS Global has the expertise and the tools to help you set up an ESOP that works. It’s time to stop worrying about red tape and start empowering your team to share in your success.

Let’s build something amazing together.