What is an ESOS and Why Does it Matter to Your Company?

Tesla has granted CEO Elon Musk shares worth about $29 billion in a new pay deal aimed at incentivising Elon to remain at Tesla in a key executive role for the next two(2) years.[1]

What is an ESOS and Why Does it Matter to Your Company?

In Malaysia, sharing equity/ownership in companies – from public listed companies to start-ups - to incentivise and retain top talents is becoming more common. This is usually done via the Employees’ Share Option Scheme (ESOS).

ESOS is a way for your company to offer selected employees (usually key executives or high performers) the right - but not obligation - to buy shares in the company at a set price (often below market value) after meeting certain conditions. These shares can be bought at a later date, based on the by-laws/rules approved by your company’s board of directors and shareholders.

Your company may set the conditions that must be fulfilled by the selected employees in order to be qualified, for e.g. they must stay with the company for a specified period of time and fulfil certain financial key performance indicators (KPI) set by the company.

ESOS helps to align your team’s interests with your company’s long -term success by enabling them to participate directly in the equity of your company (therefore making the total compensation package more attractive and competitive) and motivate them towards better performance/loyalty – a win-win.  

If you are considering to launch ESOS, feel free to contact us at maple@maplechiengco.com 

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This article dated 7 August 2025 is contributed by Maple Chieng (Corporate Commercial Lawyer) from Maple Chieng & Co. for general information only and is not a substitute for legal advice.  

Please refer our website at https://www.maplechiengco.com/ for further information.

If you have any specific queries or require advice/assistance, please contact us at maple@maplechiengco.com 

[1] Tesla approves share award worth $29 billion to CEO Elon Musk | Reuters