VSOP

In practice

Virtual options are the usual route. This is because, under German law, actual shares in a GmbH (German limited liability company) or a UG (haftungsbeschränkt), a form of GmbH with minimal share capital, can only be transferred with notarial recording, and they fragment the list of shareholders. Employees therefore receive a payment, not an actual shareholding. This means they have no voting rights and, as a rule, no share in profit distributions either. Payment is usually made only on an exit. What matters are the vesting and leaver rules, the definition of the payout event and the extent to which later rounds dilute the payout. In 2025, the BAG (Federal Labour Court) held that a clause in standard terms is invalid if it provides for the immediate forfeiture of virtual options already earned when the employee resigns. The options were consideration for work already performed. Older schemes may be invalid in this respect and should be reviewed.