Employee’s virtual stock options: Our AUTOSCAN model
We want the long-term success of our company to matter to our employees and to benefit them. That’s why we’ve devised a model for issuing virtual shares to employees. In this interview, our CEO, Hans-Peter Zillner, explains what this means!
Question: Hans-Peter, how did you come up with the idea of issuing shares to employees at AUTOSCAN GmbH?
Hans-Peter Zillner: This was an important topic for us right from the start when we founded the company. Very early on, it was clear for my co-founder, Johannes Widmann, and me that if we wanted to successfully build an international product with a small team, all employees needed to think beyond their roles and be interested in the overall success of the company. The main question is: How do you create the right incentives?
You mean letting employees “own” parts of the company is an incentive?
Certainly. The specific goals are to focus on the long-term success of the company and to keep employees engaged with AUTOSCAN for a long time. Developing a shareholding model for this purpose was not as straightforward as it might seem.
What challenges did you face?
First, when we founded the company in the summer of 2021, Austrian law didn’t provide a clear framework for this kind of issuing shares to employees. This only changed in early 2024. Second, we had to carefully consider every detail. It’s easy to overlook aspects that could lead to behaviors going against our intentions.
It’s easy to overlook aspects that could lead to behaviors going against our intentions.
So, what does your model look like now?
Our team receives virtual shares in the company. Our shareholder agreement has included a pool of such virtual shares since the beginning. They are reserved for our team, even though they don’t appear as actual shares in the company’s capital in the commercial register. The size of the pool is in line with the new regulations for employee shareholdings stated in Austrian GmbH or FlexCo codes.
Next, we defined the key metric for measuring our company’s success, which is the Monthly Recurring Revenue (MRR). Every time the MRR doubles, new virtual shares are issued.
After the MRR first doubled, we distributed the first shares to our employees. With each increase in the company’s value, we can issue new virtual shares without diluting the value of those previously distributed in the past.
One important clarification: We don’t actually issue the virtual shares themselves, but rather the option to purchase them at a predetermined price at a later date!
We don’t actually issue the virtual shares themselves, but rather the option to purchase them at a predetermined price at a later date!
Why do you issue options on virtual shares rather than the shares themselves?
Because we wanted to avoid situations where employees might have to pay taxes on them immediately, as the theoretical value of the shares could be considered part of their salary, even if no actual money changed hands. It appears that this won’t be a big issue with the new regulations in Austria. However, at the time of our founding over two years ago, we had to carefully consider such matters with our tax advisor and lawyer.
How did you decide who gets how many virtual shares?
Our intention is to reward employees based on their contribution to the last MRR doubling.
Since we value objective and transparent decisions, we base the distribution on the sum of gross salaries since the last doubling. This approach covers two relevant factors: firstly, how long someone has been contributing to the company’s success – whether they have been with the team for the entire period or joined recently. Secondly, their role – as responsibilities are reflected in full-time gross salaries, excluding special payments, and consequently receive more shares.
| Company MRR |
Shares
| Employee 1 Salary / Shares | Employee 3 Salary / Shares | Employee 3 (started 4 months ago) Salary / Shares |
|---|---|---|---|---|
|
€ 13,000 when founded |
0 |
0 = 0 |
0 = 0 |
X |
| Doubled to € 27,000 after 12 months |
100,000
|
€ 75,000 in 12 months = 51,724 |
€ 50,000 in 12 months = 34,483 |
€ 20,000 in 4 months = 13,793 |
So, as an employee, once I have my option to these virtual shares, what do I gain from it?
Right after distribution: Nothing at all! (laughs)
At first, this may sound strange, but there’s a good reason for it. I mentioned that we prioritize long-term success. If I were to immediately distribute the shares (or the option), a theoretical scenario could unfold: An employee might strike a deal with a customer, where the customer pays all licensing fees for the next few years in the first year. This would significantly boost the MRR, double it, and we’d issue more virtual shares. Then, the employee could quit and take their option with them.
To retain employees in the long term, we have included a cliff and vesting period in the model.
To prevent such situations and to retain employees in the long term, we have included a cliff and vesting period in the model. The cliff period lasts for one year after distribution. During this time, the employee receives nothing if they leave the company. The vesting period means that the employee gains full entitlement to the options only after four years with the company post-distribution. In other words, they receive 25% of their options annually.
Alright, so once these “safety periods” have elapsed, what do I gain from the virtual shares?
If AUTOSCAN GmbH distributes profits, you would receive a share of it –in the form of a bonus, since you are an employee, not a shareholder.
And if we sell the company (or parts of it) one day, you can exercise the option on your virtual shares and purchase them at the offering price. For these virtual shares, you will receive the actual value at the time of the sale from us, the owners.
| Value of the company | Value of 56.000 shares | |
|---|---|---|
| When distributing the shares | € 500,000 | € 28,000 |
| When selling the company | € 1,500,000 | € 84,000 |
| Profit before taxes for employee | € 56,000 |
What happens if an employee leaves the company with an open option on virtual shares?
Then they keep them – if the shares have already vested. It might be possible to sell these to another employee, we’ll see. We haven’t defined every possible scenario yet – we’re going to explore what the new Austrian law offers. We want to use these new possibilities to keep our promise to the team: If the company does well, you’ll do well!
We want to keep our promise to the team: If the company does well, you’ll do well!
What is autoscan?
autoscan is a scanner solution for warehouses. We also like to say: The mobile workplace in your warehouse!
autoscan uses an Android app for modern handheld scanners. It automates a variety of processes along the entire process chain in the warehouse ― from incoming goods to picking, inventory count and much more!
Plus: autoscan seamlessly integrates into your ERP system, dealer management system (DMS) or warehouse management (WHM) system.
If you would like to learn more, simply contact us! You can reach us via email at hello@autoscan.app.
Or simply book an appointment online!
