Incentive Programs for Game Development Studios in Poland: From Informal Promises to Clear Terms

You promised your lead developer “a share in the game’s success.” They are thinking of 15% of revenue. You had a one-off bonus in mind. The launch is 8 months away. What now?

This is not a hypothetical scenario. It is a situation that growing game development studios regularly bring to us, when the team is expanding, milestones are approaching, and informal promises are beginning to cause tension. The Polish gaming industry comprises approximately 500 companies and more than 15,000 employees, while the median monthly employment cost in 2025 is PLN 12,000. At these rates and with projects lasting 2 to 5 years, losing senior staff before launch represents a risk measured in hundreds of thousands of zlotys.

This article is a practical guide for founders and leaders of game development studios. You will learn which incentive program models are available under Polish law, how they differ in tax and corporate terms, how to design vesting linked to project milestones, and how to turn vague promises into a system that will actually retain your team.

Key terms you need to know

Before we get into the specifics, let us establish a common vocabulary. The following terms will appear throughout the article.

Why informal promises in game development are a ticking time bomb

Game production takes years. During that time, founders make promises, on Slack, over coffee, or by email. “Once the game is released, we’ll share the proceeds.” “You’ll get your piece of the pie.” The problem is that everyone interprets these promises differently.

An oral promise may be binding

Polish law does not require an employment contract to be made in writing, Article 29 §2 of the Labour Code allows a contract to be concluded orally (the terms should be confirmed in writing before the employee starts work, but the contract itself remains valid). This also applies to bonus arrangements.

In its judgment of 6 September 2017 (case ref. I PK 261/16), the Supreme Court held that if the bonus conditions are specific and objective, the employee is entitled to claim payment. The Court of Appeal in Kraków (case ref. III APa 11/15) confirmed the distinction: a performance-based bonus governed by specific rules and criteria gives rise to an enforceable claim, whereas a discretionary bonus only becomes an entitlement once it has been awarded.

Translating this into the realities of a game development studio:

1. If you told your lead developer, “you’ll get 5% of the game’s revenue after launch”, this may be treated as a performance-based bonus giving rise to an enforceable claim
2. If you said, “we’ll see how it goes; you’ll definitely get something”, this is closer to a discretionary bonus, although the dividing line can be fluid
3. If you promised shares in the company, the matter becomes more complicated: transferring shares in a limited liability company requires written form with notarised signatures (Article 180 of the Commercial Companies Code), so an oral promise of shares will not transfer ownership, but it may give rise to a claim for damages

A judgment of the Regional Court in Poznań (case ref. II Ca 468/22) confirmed that oral arrangements concerning a success fee may form the basis of a claim, even if they were never formalised in writing.

What this means for your studio

Every promise made to the team, even an informal one, may come back as a claim. The longer you delay formalising it, the greater the confusion. And once the game launches and real money is at stake, misunderstandings escalate.

Add to this the specific nature of technology projects: IT project failure rates range from 5% to 15%, while team turnover is a recognised category of project risk. In game development, where the production cycle lasts 2 to 5 years, a senior developer leaving 6 months before release is not merely an HR problem, it is a threat to the entire project.

Four incentive models that work under Polish law

You do not have to give away equity in the company to offer an attractive incentive program. Polish law provides several options, each with different tax, corporate, and operational implications.

Model 1: share plan in an S.A. or PSA (ESOP)

This is the only model offering full preferential tax treatment. A joint-stock company and a simple joint-stock company have access to specialised instruments under the Commercial Companies Code:

1. Conditional share capital increase (Articles 448 to 451 of the Commercial Companies Code), the general meeting resolves to increase the share capital on the condition that eligible persons exercise their right to subscribe for shares; the increase itself occurs only when the shares are subscribed for
2. Subscription warrants (Article 453 of the Commercial Companies Code), securities incorporating the right to subscribe for newly issued shares
3. Authorised capital (Article 444 of the Commercial Companies Code), authorisation for the management board to increase the share capital for a period of up to 3 years

Article 24(11)-(12b) of the Personal Income Tax Act defines an “incentive program” and grants preferential treatment: acquiring shares free of charge or at a discount does not generate taxable income at the time of subscription. Tax is only due when the shares are sold, at a rate of 19% as income from capital gains. An individual tax ruling issued by the Director of the National Revenue Information Service on 25 March 2025 (case ref. 0114-KDIP3-1.4011.7.2025.2.PT) confirms this classification.

Condition: the program must be established by a resolution of the general meeting. Without such a resolution, the preferential treatment does not apply, as confirmed by the Supreme Administrative Court.

Model 2: options for shares in a limited liability company

A limited liability company has no dedicated ESOP instruments. Article 174 §6 of the Commercial Companies Code prohibits issuing bearer, registered, or order documents for shares. There is no conditional share capital increase or subscription warrants.

In a limited liability company, the program is based on:

1. An obligation of the shareholders to increase the share capital and allow beneficiaries to subscribe for shares once the vesting conditions have been met
2. Share option agreements between the founders and program participants
3. Restrictions on the transferability of shares (Article 182 §1 of the Commercial Companies Code) and pre-emptive rights (Article 258 §1 of the Commercial Companies Code), both must be appropriately regulated in the articles of association

The preferential tax treatment under Article 24(11)-(12b) of the Personal Income Tax Act does not apply, as it is available only to joint-stock companies and simple joint-stock companies. The tax treatment of options in a limited liability company is inconsistent, some individual tax rulings indicate that taxable income may arise as early as when the option is acquired.

Model 3: phantom shares

Phantom shares are a contractual obligation of the company to pay an amount equivalent to the value of a specified number of shares. The beneficiary does not become a shareholder, the cap table remains unchanged and the ownership structure is not diluted.

Note: following the judgments of the Supreme Administrative Court of 13 June 2025 (case refs. II FSK 1235/22, II FSK 1286/22, and II FSK 1287/22), the tax treatment of phantom shares has changed. The Supreme Administrative Court held that phantom shares granted free of charge under incentive programs do not constitute derivative financial instruments. Payments under such programs constitute employment income taxed at the progressive rates of 12%/32%.

This means a higher tax burden than under a share plan in a joint-stock company or simple joint-stock company, but in return:

1. There is no impact on the ownership structure
2. Implementation is simpler, program rules and participation agreements are sufficient
3. The model is flexible, it can easily be linked to the milestones of a specific project

Model 4: milestone bonuses and success fees

The simplest model: a cash bonus linked to achieving a specific result, such as launching the game, reaching a sales threshold, or receiving positive reviews. Tax treatment: employment income taxed at 12%/32%, with the company acting as the remitter of personal income tax and social security contributions.

Advantages: no impact on the cap table, quick implementation, and easy for the team to understand. Disadvantages: the highest tax burden and no sense of “co-ownership” among beneficiaries.

Comparison of models, what to consider

Contact us, we will help you choose a model tailored to your studio’s legal form and stage of development.

How to design vesting linked to game milestones

Vesting in game development has its own natural characteristics: the project life cycle of 2 to 5 years provides a ready-made vesting window, while production milestones such as the vertical slice, alpha, beta, and release serve as natural triggers.

The legal framework for vesting in Poland

Polish law does not directly regulate vesting. The structure is based on:

1. Article 353¹ of the Civil Code (freedom of contract), the parties may structure their legal relationship as they see fit, provided that its content or purpose does not conflict with the nature of the relationship, the law, or the principles of social coexistence
2. Article 199 of the Commercial Companies Code (redemption of shares), in the case of compulsory redemption, the consideration may not be lower than the portion of the company’s net assets attributable to the share, as shown in the financial statements
3. Article 182 §1 of the Commercial Companies Code (restrictions on transferability), the transfer of a share requires the company’s consent unless the articles of association provide otherwise
4. Articles 483 to 484 of the Civil Code (contractual penalty), a contractual penalty may secure the obligation to resell shares in a bad leaver scenario

Vesting structure for a game development studio

The standard model is 4-year vesting with a 12-month cliff, but in game development it is worth adapting the schedule to the production timeline:

Good leaver / bad leaver clauses

These clauses define what happens to vested entitlements when a program participant leaves before the vesting period ends.

Good leaver, departure for “justified” reasons such as illness, mutual agreement, redundancy, or death. Typical consequences:

1. Retention of vested entitlements
2. Loss of unvested entitlements
3. Repurchase of vested shares/options at market value or according to an agreed formula

Bad leaver, departure for “negative” reasons such as disciplinary dismissal, breach of a non-compete obligation, or breach of an NDA. Typical consequences:

1. Loss of all entitlements, both vested and unvested, or repurchase at nominal value
2. Possibility of imposing a contractual penalty (Articles 483 to 484 of the Civil Code)

Limitation: Article 199 of the Commercial Companies Code establishes a minimum consideration threshold for the compulsory redemption of shares. Article 58 of the Civil Code allows clauses that are grossly unfair to one party to be declared invalid. It is therefore worth consulting a lawyer on the wording of these clauses, provisions that are too aggressive may be challenged.

How to avoid diluting the ownership structure, the incentive program and the cap table

Game development founders often have one major concern: “If I give away equity, I’ll lose control.” This is a legitimate concern, but it can be addressed.

Models that do not affect the cap table

Phantom shares and milestone bonuses do not affect the ownership structure. They allow the team to share in the financial success without transferring ownership. For a studio that is not planning an investment round in the near future, this is often a sufficient solution.

If you opt for equity, plan the pool in advance

In the VC market, the standard ESOP pool at the seed stage is 10% to 20% of the share capital on a fully diluted basis. Whether it is established before the round (pre-money) or after the round (post-money) determines who bears the cost of dilution:

1. Pre-money option pool, the ESOP pool is included in the pre-money valuation; the existing shareholders, namely the founders, bear the cost of dilution
2. Post-money option pool, the ESOP pool is carved out after the round; the founders and the investor share the cost of dilution

During due diligence, investors check whether the incentive structure has been formalised. The absence of an orderly program is a warning sign, it suggests potential claims, unclear obligations, and a risk of disputes after the transaction closes.

Typical investor stakes in successive rounds

If you are planning a funding round, align the incentive program with the cap table and the articles of association before you begin discussions with an investor. Make sure that granting options or shares does not require shareholder approval that you do not have.

Seven steps to formalising an incentive program

Below is a specific sequence of actions, from auditing the current situation to communicating with the team.

1. Document every promise. Review Slack, emails, and meeting notes. Record what was said or suggested to each team member. Assess which of these promises may be legally binding (see: the criteria for performance-based versus discretionary bonuses)
2. Define beneficiary groups. Not everyone in the studio should be covered by the same mechanism. Founders, leads, seniors, juniors, and B2B contractors each have different expectations and a different impact on the project. Assign the appropriate model to each group, equity, options, phantom shares, or bonuses
3. Link the system to milestones. Every benefit should have a clear trigger and vesting conditions. Example: 25% of the pool after alpha, another 25% after beta, 25% upon launch, and 25% upon reaching the revenue threshold within 12 months of release
4. Introduce vesting with good leaver / bad leaver clauses. Determine what happens if someone leaves before the project is completed. Without this mechanism, you have no retention tool
5. Formalise the program in writing. At a minimum, you need incentive program rules, individual participation agreements, and settlement rules. Even a simplified version is better than having no documentation at all
6. Consult a tax adviser on the tax treatment. The difference in tax rates between models can be more than ten percentage points,19% versus 32%. Following the Supreme Administrative Court judgments of June 2025, the treatment of phantom shares is clear, but options in a limited liability company continue to be treated inconsistently in individual tax rulings
7. Prepare a communication plan for the team. A transparent presentation of the rules, who gets what, when, for what, and how much, reduces conflict. Contractors and employees are often concerned that formalisation means taking away previous promises; explain that the aim is to organise and secure those promises

A multi-project studio, how to allocate benefits

If your studio is working on two or three games simultaneously, the incentive program must take this into account. One shared “pot” creates conflict, the team working on the less profitable project feels unfairly treated.

The solution: separate incentive pools for each project, with clear allocation rules. Each project has its own bonus budget or phantom share pool linked to the revenue generated by that particular title. A person working on two projects participates in both pools, in proportion to their involvement.

This structure requires precise documentation, but it eliminates the most common source of disputes in studios with a portfolio of several games.

How we can help your studio

Designing an incentive program in game development requires combining several areas of law: employment law (bonuses, remuneration rules), corporate law (cap tables, option plans, shareholders’ agreements), contract law (success fees, vesting clauses), and tax law (personal income tax treatment).

At Sawaryn & Partners, we combine these areas into one coherent model, tailored to the studio’s stage of development, the company’s legal form, and the production schedule. We do not create documents “just in case.” We design rules where risk or value actually arises.

Our support includes:

1. Auditing existing promises and incentive arrangements, identifying obligations that may be binding
2. Selecting an incentive model suited to the company’s legal form and investment plans
3. Preparing documentation: program rules, participation agreements, and vesting clauses with a good leaver / bad leaver mechanism
4. Aligning the program with the cap table and the articles of association
5. Supporting communication of the program to the team

Incentive programs in game development, it is time to bring order

Informal promises of “a share in the game’s success” are one of the greatest sources of conflict in growing game development studios. The closer the launch gets, the higher the stakes, and the harder it becomes to discuss terms that should have been agreed at the outset.

You do not have to give up control of the company to build a system that retains your team. Phantom shares, milestone bonuses, and vesting linked to the production schedule are tools that work under Polish law and do not require a revolution in the ownership structure.

If your studio is growing, preparing for a launch, or planning an investment round, now is the right time to put these matters in order. Contact us, we will assess your situation and show you which model best suits your studio.

Frequently asked questions

Do I have to give away equity in the company to offer an attractive incentive program? No. Phantom shares and milestone bonuses allow the team to share in the financial success without transferring ownership. Phantom shares are a contractual obligation of the company to pay an amount equivalent to the value of a specified number of shares, the beneficiary does not become a shareholder, and the cap table remains unchanged. Bonuses linked to milestones such as a launch or sales threshold work in a similar way. Equity makes sense when you want to give the team a sense of co-ownership and are planning an investment round.

What happens if the lead developer leaves during the project, how can the studio protect itself? Use good leaver / bad leaver clauses combined with vesting. If the person leaves before acquiring full entitlement, for example, before the game’s launch, they lose the unvested portion. In the event of a “negative” departure, such as breaching an NDA or a non-compete obligation, they may also lose the vested portion, subject to the limits under Article 199 of the Commercial Companies Code for share redemption and Article 58 of the Civil Code, which prohibits grossly unfair clauses. Without vesting, you have no retention tool.

Can promises made orally or on Slack be legally binding? Yes, under certain conditions. An oral promise of a cash bonus that includes specific and objective conditions, such as “5% of revenue after launch,” may be treated as a performance-based bonus giving rise to an enforceable claim, as confirmed by Supreme Court case law (case ref. I PK 261/16). An oral promise of shares in a limited liability company will not transfer ownership due to the formal requirements of Article 180 of the Commercial Companies Code, but it may give rise to a claim for damages. Formalising promises is therefore not a mere formality, it reduces the risk of disputes.

What are the tax differences between a bonus, stock options, and phantom shares? A cash bonus and phantom shares, following the Supreme Administrative Court judgments of June 2025, constitute employment income taxed at 12%/32%, with the company acting as the tax remitter. A share plan in a joint-stock company or simple joint-stock company that meets the conditions under Article 24(11)-(12b) of the Personal Income Tax Act allows taxation to be deferred until the shares are sold, the rate is 19%, with no remitter obligations for the company. Options for shares in a limited liability company are treated inconsistently in individual tax rulings. The difference between 19% and 32% is significant for high-value benefits, so it is worth calculating the impact before selecting a model.

When is the best time to implement an incentive program? There are three key windows: (1) before an investment round, investors check whether the incentive structure has been formalised, and the absence of a program is a warning sign during due diligence; (2) before a game is released, when the stakes are rising and the risk of departures is highest; and (3) when the team grows beyond 10 to 15 people, when informal arrangements are no longer sufficient. The earlier you act, the less confusion there will be to resolve.

How should you design a program that works across multiple concurrent projects? Create separate incentive pools for each project, with clear allocation rules. Each title has its own bonus budget or phantom share pool linked to the revenue generated by that specific game. A person working on two projects participates in both pools in proportion to their involvement. This structure requires precise documentation, but it eliminates conflicts between teams working on different titles.