ESOP is a program that provides stock options to employees and consultants. Standard structure: 4 years vesting + 1 year cliff. In Turkish law, it is designed in parallel with TCC Art. 341 (option), income tax (Art. 61) and SSI.
How to set up an ESOP pool?
Vesting structure
- 4-year 1-year cliff: Standard. At the end of the first year, 25% is vested; the remaining 75% at 1/36 each month.
- Performance-based: Depends on target KPIs (number of users, MRR, etc.).
- Hybrid: 70% time-based, 30% performance.
Leaver clauses
| Type | Vested options | Unvested |
|---|---|---|
| Good leaver | Full protection | Zero (or partial vesting) |
| Bad leaver | Return to company | Zero |
| Disability/Death | Full + accelerated | Full vesting |
| Acquisition (single trigger) | Accelerated 100% | 100% |
| Acquisition (double trigger) | Accelerated 100% if dismissed | 100% if dismissed |
Is there a tax when an ESOP grant is received?
No. In the Turkish tax system, ESOP is not a grant, but income tax (Art. 61 fee) + SSI arises from the exercise of the option; The increase in value obtained from the sale is evaluated within the framework of KVK article 5/1-e (2% year requirement).
Confusion for foreign employee?
If the employee resides in another country, the "source country" within the framework of the tax treaty (DTT) may be Türkiye. Important: Clarify in the contract whether tax liability is attributed to the employee or the company.
Are Founder's shares subject to reverse-vesting?
After VC investment, yes. The investor requires the founder to remain with the company for 4 years; In case of separation, he returns his shares to the company ("forfeit").
Phantom stock vs real option difference?
Phantom: Not shares; cash payment (up to share appreciation). fee for tax purposes. Real option: Share transfer + KVK parallel.
Can an employee leaving ESOP sell the vested option?
If there is "priority to partners" in the company's articles of association, it makes an offer to the company first. If there is no buyer within a typical 30-90 days, a sale to an outside investor is possible.
Relevant legislation
- Turkish Commercial Code art.331-644 — A.Ş. and LTD establishment, share transfer.
- FSEK art.2/1-1 — Protection of software as a work.
- SMK No. 6769 — Trademark, patent, utility model, design.
- KVKK article 12 — Data security, by-design principle.
- TBK art.193 et seq. — Contracts, guarantees, indemnification.