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An Equity Incentive Plan helps Nigerian companies reward and retain valuable employees by offering them ownership stakes in the business. These plans typically grant stock options, restricted shares, or performance units to key staff members, giving them a chance to benefit directly from the company's growth.

Under Nigerian corporate law and Securities and Exchange Commission guidelines, these plans must outline clear vesting schedules, exercise prices, and eligibility criteria. Companies listed on the Nigerian Exchange Limited often use these plans to align employee interests with shareholders' goals while creating competitive compensation packages that attract top talent.

Consider implementing an Equity Incentive Plan when your Nigerian company needs to attract high-performing talent or retain key employees in competitive industries. This tool becomes especially valuable during rapid growth phases, when preparing for an IPO, or when competing with multinational corporations for skilled professionals.

The plan works best when your company has clear performance metrics and wants to create long-term commitment from executives and essential staff. Nigerian startups and tech companies often introduce these plans early to conserve cash while offering compelling compensation packages. It's particularly effective when expanding into new markets or launching innovative products where experienced talent is crucial.

• Stock Options: Most common in Nigerian tech startups, offering employees the right to buy company shares at a fixed price after a vesting period
• Restricted Stock Units (RSUs): Popular among established companies, granting actual shares that vest over time with fewer tax complications
• Performance Share Units: Links equity rewards to specific company milestones or KPIs, common in Nigerian financial institutions
• Share Appreciation Rights: Provides cash payments based on stock value increases, preferred by private companies
• Employee Share Purchase Plans: Allows staff to buy company shares at a discount, often used by public Nigerian companies

• Board of Directors: Approves and oversees the Equity Incentive Plan, setting overall allocation limits and terms
• Corporate Legal Counsel: Drafts plan documents, ensures compliance with Nigerian securities laws and SEC regulations
• HR Directors: Manages plan implementation, communicates terms to employees, handles documentation
• Eligible Employees: Key staff members who receive equity grants based on performance or position
• Company Secretary: Maintains official records, handles regulatory filings, updates share registers
• External Auditors: Reviews plan compliance, validates share valuations and accounting treatments

• Company Details: Gather current share structure, authorized capital, and existing shareholder agreements
• Plan Scope: Define total shares available, eligible employees, and vesting schedules
• Performance Metrics: Establish clear KPIs and milestones that trigger equity awards
• Tax Implications: Research current Nigerian tax laws affecting equity compensation
• Regulatory Compliance: Check SEC requirements and Nigerian Exchange Limited rules if applicable
• Board Approval: Prepare board resolution and shareholder documentation
• Documentation System: Set up tracking for grants, vesting, and exercise records

• Plan Purpose: Clear statement of objectives and intended beneficiaries
• Share Pool Details: Total number of shares reserved and types of awards available
• Eligibility Criteria: Specific requirements for participation and selection process
• Vesting Schedule: Detailed timeline and conditions for award maturation
• Exercise Terms: Price determination, payment methods, and exercise windows
• Termination Provisions: Effects of employment ending on unvested awards
• Corporate Events: Treatment of awards during mergers, acquisitions, or IPOs
• Administration: Board or committee powers and plan management procedures
• Amendment Rights: Process for modifying plan terms and participant rights

An Equity Incentive Plan differs significantly from a Simple Agreement for Future Equity (SAFE) in several key aspects within Nigerian corporate law. While both involve equity distribution, their purposes and implementations vary considerably.

• Primary Purpose: Equity Incentive Plans focus on rewarding and retaining existing employees through scheduled share grants, while SAFEs are investment instruments used to raise capital from external investors
• Timing of Equity: Incentive Plans typically grant immediate or scheduled equity rights, whereas SAFEs convert to equity only upon specific future events like funding rounds
• Regulatory Requirements: Incentive Plans must comply with Nigerian employment and securities laws, while SAFEs face fewer regulatory hurdles as investment instruments
• Beneficiary Structure: Incentive Plans target internal stakeholders with employment relationships, but SAFEs are designed for external investors seeking future ownership