When Trintech places 23 per cent of its stock on the US Nasdaq and German Neuer Markt stock exchanges this morning, its 250 employees stand to make substantial gains from the sale.
At the moment Trintech employees hold around a 3 per cent stake in the company, but 3.7 million in stock options have been set aside for employees over the next four years.
This potentially values the employee shareholding in the company at 15 per cent as employees increase their stakes over time.
Assuming a successful trade sale, and the stock holds its opening price of $11.55 (€11), rough calculations indicate that on average each Trintech employee holds a stake worth around $30,000 before tax. However, a complex employee share option scheme means more senior and more productive members of the workforce will be entitled to more shares. The scheme is specifically designed to aid staff retention - a growing problem among software companies.
Of the additional 5.8 million shares Trintech has issued, employees have been given the option to purchase 7.5 per cent. This equates to an average of $20,000 worth of shares per employee. Industry observers have said the current employee shareholding of 3 per cent is quite low by comparison with typical US technology companies.
However, Trintech says this is because it is in the midst of a high growth phase, and the bulk of its workforce has only been recruited in the last year. The share option scheme is designed to be of greatest benefit to longer-serving, higher-performance employees.
Trintech also runs a Friends and Family plan allowing employees to purchase shares at the current market price. These shares are then placed in a trust fund for three to five years, with the effect of minimising tax exposure. According to Mr Liam Hennessy, partner with Farrell Grant Sparks, Trintech's employee share option programme is very progressive.
"It appears to be a collective scheme for all employees. To qualify for shares out of the trust every employee needs to be treated equally. However, a separate share option scheme is designed to reward individuals meeting individual targets," Mr Hennessy says.
Trintech employees are among the latest Irish software employees to gain from a Nasdaq listing. Despite considerable blows to their share prices over the last year, CBT's and Iona Technologies' employees have also benefited from generous share option schemes. Baltimore Technologies, which is due to take a listing on the Nasdaq in November, is believed to be finalising an employee share option programme for its 500-strong workforce. When concluded they may be entitled to between 20 and 25 per cent of the company's stock.
Enba, the Dublin-based holding company offering Internet-only financial services, is also believed to be on the verge of announcing a similar share option scheme for its 120 employees.
