Ultimate for All 🙌🏻 - our ESOP Program

Disclaimer: This documentation is a non-binding summary for convenience purposes only and the terms governing the options are included only in a signed Option Plan Agreement between an Employee and the Company. 

• What this guide is all about

• Quick refresher: What are stock options?

• The Open Equity Formula

• ESOP FAQ

At Ultimate we strongly believe in employee ownership in our Company. We are in business to create value for all of our stakeholders; our customers and partners, our employees, our shareholders, the customer service industry, and the technology community. 

Our commitment to creating value for stakeholders vs. shareholders is one way that we live our Ethics value.

Ultimate for All gives every team member the opportunity to share in the growth and success of the company. Our open and inclusive ESOP program fosters a culture of transparency, ownership and collaboration at Ultimate. 

It also sends the right message: that we’re all in this together, and that no matter where you are in the organisation, everyone has the potential to drive real impact through their work.

What this guide is all about

This guide is meant to help you understand the piece of Ultimate that you’re going to own! Its goal is to be more straightforward than the full Stock Option Agreement which you are advised to read, which goes into the full legal details. Please note, however, that while we hope that this guide is helpful to understanding the stock issued to you, the governing terms and conditions are contained in the signed Options Agreements. You should consult an employment attorney and/or a tax advisor if you have any questions about navigating your stock options and before you make important decisions.

Three things must happen for your stock options to be meaningful:

1. You must vest the stock (we have a 1 year cliff and 3 years of vesting after that).

2. You must stay until we have a liquidation event (or the lock-up period passes in the event we go public), or you have the cash to exercise your stock after termination.

3. We must make the company worth more than the liquidation preference.

Quick refresher: What are stock options?

Stock options give you the opportunity, but not the obligation, to purchase a specific number of shares of Ultimate stock at a specific price for a specific period of time.

The ‘specific price’ of your stock options is the strike price, otherwise called the exercise price, which is detailed in your Options Agreement. The strike price is the price you can pay to purchase stock, regardless of when you make the purchase. Solely for the purposes of example, if you are granted stock options with an exercise price of €1 per share of common stock today, and if Ultimate grows later so its common stock is worth €20 per share, you will still be able to buy the common stock upon exercise of your option for €1 per share.

Ultimate for All is an Employee Stock Options Program (ESOP) which structures how options are allocated to team members and the rules governing those options.

The Open Equity Formula

Ultimate for All is allocated using our Open Equity Formula. Using an open formula helps keep compensation fair and creates transparency into the decision-making. 

We designed this formula to be scalable and aligned with our Ultimate values (Trust, Impact, Customer Success, Ethics). 

ESOP as a % of Base Salary = (Grant x Performance) / Risk + Seniority 

Using Base Salary as a Starting Point

The Open Equity Formula is used to calculate the percentage of base salary that you will receive as stock options as part of your total compensation package. In addition to being industry-standard practice, we use base salary as the starting point for two key benefits. 

Firstly, salary is a reasonable measure of the value each team member brings to the table. Secondly, it allows us to maintain a standard approach, even with later fundraisings. 

Grant sizes stay the same in cash terms, but the number of options granted automatically declines as the valuation – and therefore share price – increases. This means that we offer consistent rewards, but those who joined earliest see the biggest benefit.

The Grant

Grant = 50% of base salary and is the same for every employee, regardless of role. Everyone has an equal responsibility to bring their A-game to work and we value that sense of ownership and commitment to create a positive impact equally across our team. 

Values: Trust, Ethics

Top Performers

Top performers receive additional awards and recognition at Ultimate. These could include added L&D opportunities, fast-track career progression with greater ability to shape their own path, and bonus options.

Performance is measured and communicated in annual and/or bi-annual performance reviews, depending on your team. Managers are provided a Performance Evaluation Matrix to benchmark team members for additional benefits. All Performance Scores are subject to approval by the executive team. 

Top performers are assessed on two dimensions: your performance so far (Impact), and your expected performance in the future (the Trust and Customer Success you’ve built). Being a top performer means that your performance is in the top 10-20% of your level.

Senior/Lead -level employees who are classified as top performers and have been with Ultimate for a minimum of 2 years may receive a Performance Score of 1.5x in the Open Equity Formula. 

Head of -level employees and above who are classified as top performers and have been with Ultimate for a minimum of 2 years may receive a Performance Score of 2.0x in the Open Equity Formula. 

Values: Impact, Customer Success

The Risk Score

When you join a startup, there’s a big risk difference between starting as the 5th person versus starting as the 50th. The risk score is a measure of the risk an individual took joining Ultimate when they did. 

Values: Trust, Impact

Seniority

Senior team members take on larger responsibility, scope and job complexity. To reflect the greater impact senior individuals drive at Ultimate, we reward these roles with additional stock options. 

This also means that as individuals are promoted through Ultimate, their stake-holding in the company grows with them. 

Values: Impact

ESOP FAQ

What is the total number of shares outstanding?

As of May 2021, we have 2,888,700 shares outstanding (fully diluted). You can use this to calculate your percentage ownership stake at the company. Note that this number does not mean much and will change in the future, hence we advise to focus on the absolute number of shares instead.

I was told that my shares were worth XX. How do you estimate the share value?

We estimate our share price at any given time by using the share price paid by investors in our latest round of fundraising and how our revenue has grown since then. 

We aim to refresh share price estimates on a bi-annual basis. 

How can I estimate how much money I might make from my options?

Front offers a great compensation calculator that we found useful when creating this program.

How was the strike price of €XX calculated?

The strike price is the price at which the options were created at. For Ultimate for All, the options were created during our Series A at a 10% discount to our prior round valuation, which was a small internal round held in November 2019. 

I was just promoted to a Senior and should receive additional stock options. What happens now?

Congratulations on the promotion! Alongside the contract addendum confirming your promotion, you will receive an additional signed Options Plan Agreement for the additional stock options, with the vesting period for those options beginning immediately upon signing (assuming you are outside of a probationary period). 

What is the vesting period?

We have an industry-standard 4-year vesting schedule, with a 1-year cliff. The subscription period for the options will begin post a successful probation period (our probation period is the German standard 6 months from employment start date). 

Option holders are entitled to exercise 1/4 of their options on the first anniversary of the subscription period. Following that, after each one full month option holders are entitled to use 1/36 of their remaining options.

What happens if I leave the company?

If you leave the company, all unvested options at the time will terminate upon termination of employment. Any garden leave period as part of a Termination Agreement does not count towards your vesting period.

Any vested options you have at the time of termination must be exercised by you within 45 days of the termination of employment and/or the signing of a Termination Agreement. 

Can you talk about taxes?

For legal reasons, we can not provide you tax advice. We recommend that you seek tax advice from a qualified advisor before exercising your options. Note that the tax you pay will be determined by the country in which you are employed and pay taxes.

Can the terms of Ultimate for All change in the future?

The terms of Ultimate for All are subject to approval by our Board of Directors and we are submitting them for approval in our next board meeting at the end of May 2021. 

Following that, Ultimate for All can still be amended at the Board’s discretion. We will keep you all informed of any changes and the reason behind them. Examples of such changes could include adjusting the option plan to ensure it stays the most tax-favourable model for our team, or switching your shareholding to a new US TopCo in the unlikely event that we do a Delaware Flip.