Employee Share Options Service (ESOS)

The Phillip ESOS Advantage

  • Allows immediate sell with best effort*
  • 100% financing with Phillip Financial

*Terms & Conditions Apply

Employee Share Options Service (ESOS)

Board of directors, managers, executives and selected employees are granted share options from their company as a form of staff reward or as part of their compensation scheme.

If your company rewards you with share options, you will have the right but not an obligation to purchase a given number of shares of your company in the future at a predetermined price (exercise price). Share options can be highly rewarding if your company performs well. When the market share price rises above the exercise price, you can benefit from selling the shares after exercising your share options, thereby realizing a capital gain.

However, the exercise process takes time and the shares can only be sold after the exercise process is completed. As a result, you would not be able to sell the shares at your desired selling price since the market price would most probably have moved. Also, when the time comes to exercising your share options, large amounts of cash may be required. As a result, you may not be able to exercise all your entitlements at one go.

Important Notes:

  1. No Short-Selling is allowed. It is the employee’s responsibility to ensure that the shares are credited into his account before a sell order is placed with his Trading Representative or via POEMS. Alternatively, the employee may sign up for the Shares Borrowing and Lending (SBL) facility to perform an “immediate sell with best effort”.
  2. Number of share options exercised MUST MATCH the number of shares borrowed and sold in SBL.
  3. It is recommended that the employee should only exercise his share options if they are “in the money”. You may wish to consult your Trading Representative on this matter.

How share options financing works

When employees choose to initiate an “immediate sell with best effort” option and at the same time exercise their share options, they are not required to put in any collateral or cash.


Example 1: Full Financing and Immediate Sell with Best Effort

An Employee exercised 10,000 shares options at an exercise price of $1.50 per share and sold them on the same day at a market price of $2.50 per share.

Description 100% Financing with "Immediate Sell"
Exercise cost (incl. CDP fee on exercise) $15,010.70
ESOS processing fee $20.00
Total ESOS Loan $15,030.70
ESOS financing interest (7% p.a.)** $57.65
Sub-to-sub transfer charges $107.00
Total ESOS exercise costs $15,195.35
Gross Sales proceeds $25,000
Less Sales costs:
(1) Brokerage rate (min S$40 or 0.5%) $125.00
(2) Clearing fee $10.00
(3) SGX access fee $1.88
GST on (1)+(2)+(3) $9.58
(4) SBL borrowing fee (10% p.a.)** $136.99
(5) SBL admin fee $20.00
(6) SBL contract settlement fee $0.50
GST on (4)+(5)+(6) $11.02
$24,685.03
Estimated net profit due to client $9,489.68
Employees can also opt for immediate sell, while self-financing the option exercise.


Example 2: Self-finance and Immediate Sell with Best Effort

An Employee exercised 10,000 shares options at an exercise price of $1.50 per share and sold them on the same day at a market price of $2.50 per share.

Description 100% Financing with "Immediate Sell"
Exercise cost (incl. CDP fee on exercise) $15,010.70
ESOS processing fee $10.00
Sub-to-sub transfer charges $107.00
Total ESOS exercise costs payable $15,127.70
Gross Sales proceeds $25,000
Less Sales costs:
(1) Brokerage rate (min S$40 or 0.5%) $125.00
(2) Clearing fee $10.00
(3) SGX access fee $1.88
GST on (1)+(2)+(3) $9.58
(4) SBL borrowing fee (10% p.a.)** $136.99
(5) SBL admin fee $20.00
(6) SBL contract settlement fee $0.50
GST on (4)+(5)+(6) $11.02
$24,685.03
Estimated net profit due to client $9,557.33
**ESOS financing and SBL borrowing for 20 days. Actual duration depends on processing time taken.

Fees & Charges

Financing
Financing Interest 7% p.a.
Processing Fee - SBL with financing or financing only 0.1% on each loan drawn down/option(s) exercised (min S$20, max S$150).
Processing Fee - Self-financing $10.00 per option (s) exercised.
Cancellation Fee for ESOS S$100 if employee withdraws, or exercises invalid options after application has been processed.
Transfer Fee (for depositing of share collateral)
  1. S$10.70 (inclusive of GST) per counter from CDP to PFPL.
  2. S$20.70 (inclusive of GST) per counter for transfer out of Phillip.
Quarterly Sub-Account Maintenance Fee $15.00. Waiver is on the condition of 1 trade done in that quarter.
Securities Borrowing & Immediate Sell
SBL Borrowing Fee 10 % p.a.
SBL Admin Fee S$20.00
SBL Contract Settlement Fee S$0.50
Sub-to-sub transfer charge S$10.70 (inclusive of GST) per counter per lot, subject to a maximum of S$107.00 (inclusive of GST) per counter.
Sale of shares Standard brokerage and fees apply.
Miscellaneous
CDP Processing Fee $10.70 (inclusive of GST) per option exercise.
Dividend Charges (applicable for shares held in PFPL Share Financing Account) <=S$100 - $1.07 (inclusive of GST)
>S$100 - 1% of Net Dividend, max. S$53.50 (inclusive of GST)

*In addition, handling charges are also imposed by foreign custodians for foreign shares
* Charges subject to change. Please contact your trading representative for the latest charge schedule.

Share Options Exercising Procedures

  1. The Employee is to furnish Phillip Securities (PSPL) with the Original Option Exercise Notice Form, duly completed and signed.
  2. Indicate to your Trading Representative if “Immediate Sale with Best Effort” is to be used.
  3. If financing is obtained, a cheque for the full exercise amount will be issued to the Employer directly by Phillip.
  4. The Employer will process the Exercise Notice in accordance with the listing requirements.

Learn More

If you are an existing client with POEMS and wish to know more about the ESOS service, simply speak with your Trading/Financial Adviser's Representatives.

Alternatively, you may call us at 6531 1555, email us at talktophillip@phillip.com.sg, or visit us at any of our Phillip Investor Centres today.

For a copy of the Information Sheet and Important Notice, please click here.