Many employers see the benefit in implementing employee stock plans. This can include such vehicles as:
Eikon Law can help you assess the various options before drafting a plan to make sure that all considerations are weighed to align with the needs and goals of your company.
Incentive stock options (ISOs) are an alternative compensation tool that can be beneficial to both the employer and employee. For the employer, they provide an attractive incentive to offer a prospective employee, one that can be less expensive than locking into a higher salary and one that would also incentivize the employee to be committed to stay. For the employee, they come with enticing tax advantages over other stock options, such as nonqualified stock options (NSOs), but they do also incorporate risk due to the timing requirements for exercising them.
Eikon Law can provide you with experienced guidance to help make sure all of your agreements are drafted properly
A vesting schedule delineates the timeline and restrictions for issuance and receipt of company stock or other contributions. This can apply to founders and employees, with appropriate schedules for each.
There are three basic types of vesting schedules: immediate, cliff, and graded. With “immediate vesting,” full value is held by the recipient upon issuance. With “cliff vesting,” 100% ownership is transferred at a particular point in time. With “graded vesting,” the recipient gains a percentage over a period of time that eventually results in 100% ownership.
Oftentimes, even founders are not given immediate vesting, with the philosophy that the money or stock is reward not just for the conception of the idea or business but also for the expected continuing contributions. Given both the legalities and the sensitivities potentially involved, it is advisable to have an experienced lawyer involved in this step too.