Employee shareholdings are riskier than you think

Meeting in the start-up

Employee programs are a frequently used tool to retain talent.

(Photo: Unsplash)

Dusseldorf, Berlin Employees of German start-ups face nasty surprises: the current crisis on the financing market will in many cases also have a negative impact on their participation programs. Software developers, managers and marketing specialists could get significantly less money than they expect if the company is later sold.

The programs are designed to bind employees more closely to young companies. Companies valued at billions such as the travel experience provider Getyourguide, the neobank N26 and the digital insurer Wefox offer them as well as very young start-ups. Part of the salary is paid in the form of rights to company shares.

This means that the employees have a financial interest in their company having a successful exit – be it through an IPO or a sale. “Qualified employees don’t go to a start-up because of the fixed salary, but usually expect to be involved,” says Gerhard Wacker from the management consultancy PwC.

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