Legal Advice on Taking Equity As Compensation When You go to Work for a Company

On a business/company start-up email list I subscribe to, someone asked for advice in the  negotiation of taking equity as compensation (either equity alone or equity and salary) when you go to work for a company. Here is one item that is often overlooked: after you get an equity offer from the company, have them put it in writing, and get it reviewed by an attorney. Too often I see poorly worded offer letters that include vague phrases that only lead to confusion or disappointment later.

For example, the offer letter might say that you will get three percent of the company. What does this mean? Three percent as of the date of the offer? when the options vest? before or after that next major round of equity financing? When calculating percentages, the company includes actually issued stock. Does it also include vested stock options? issued but not yet vested stock options? You get the idea.

Make sure your attorney reviews all of the related documents. Even though it may cost you a little more, it will be worth it in the long run. In law the fine details matter. More often than you would think, I find unpleasant legal terms in the related documentation that my client needs to know about. For more discussion on this issue, see my blog article The Lesson from Skype: Don’t Count Your Stock Options Before They Hatch.

7 Responses to Legal Advice on Taking Equity As Compensation When You go to Work for a Company

  1. You are so interesting! I do not suppose I’ve read through anything like that before. So wonderful to find another person with genuine thoughts on this subject matter. Really.. thank you for starting this up. This web site is one thing that is required on the internet, someone with a bit of originality!

  2. says:

    May I simply just say what a comfort to discover a
    person that actually understands what they are talking about over the internet.
    You definitely realize how to bring a problem to light and make it important.

    More and more people must check this out and understand this side of the story.
    It’s surprising you are not more popular because you surely possess the gift.

  3. It really is definitely a terrific in addition to handy section of data. I am pleased that you simply provided this helpful data with us. Be sure to keep us current like that. Thanks for expressing.

  4. Thanks for another informative web site. Where else may I am
    getting that type of information written in such an ideal manner?

    I have a project that I am simply now working on, and I
    have been on the look out for such info.

  5. Christal says:

    Hi thgere just wanted to give you a briedf heads up and let you know a few of
    the images aren’t loading correctly. I’m noot sure why but I think its a linking issue.
    I’ve tried iit in two different internet browsers and both show thee same results.

  6. I’d lijke to thank you ffor the efforts you’ve put in penning this website.
    I’m hoping to view the same high-grade content from you later
    on as well. In fact, your creative writing abilities has encouraged me
    to get mmy own, pewrsonal sitge now 😉

  7. Elaine says:

    Hi there to every body, it’s my first pay a visit of this web site; this website consists of amazing and in fact
    excellent information in support of visitors.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: