Hiring and retaining talent has been cited as major challenge by 50% of the start-ups in Germany, as a result the start-ups have on an average five vacant positions at any given period, this can be ascribed to the lack of skilled employees and higher salary expectations. One out of four start-ups in Germany even grapple to compete with big established competitors that incentivize the employees with high pay scales and other benefits, hence start-ups use stock option plans to level out the benefits for employees with the expectation of future payouts, but equity distribution framework conditions in Germany make it prohibitively difficult to issue stock options.
“Giving out stock options is prohibitively difficult under German law, and the workaround is twice as expensive as setting up such a scheme in London, Israel or in Silicon Valley, this is a massive disadvantage for German Start-ups” - Johannes Reck Founder GetYourGuide
Comparison of equity distribution schemes Germany vs U.K vs U.S.A