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Startup - Equity Compensation

October 18, 2023 Equity Compensation

Dealing with “Dead Equity”

"Dead equity" refers to company stock owned by individuals and entities no longer contributing to the company.

Startup - Series You’ve Got VC Money

October 24, 2022 Equity Compensation

You’ve Got VC Money: Cap Tables

The company's cap table is a historical record of who owns how many shares of the company's stock, stock options, warrants, convertibles, and other ownership stakes in the company.

Startup - Series You’ve Got VC Money

October 24, 2022 Equity Compensation

You’ve Got VC Money: Equity Compensation Best Practices

Now is the time to adopt an equity incentive plan if you don't already have one. Your investors likely made it a condition of financing to adopt a plan with a certain size of share reserve and certain forms of award agreements.

Startup - Series You’ve Got VC Money

October 24, 2022 Intellectual Property

You’ve Got VC Money: Review Your IP Strategy

After raising a significant amount of cash from VC investors, it is time to do a top-to-bottom review of your company's intellectual property (IP) portfolio.

Startup - Series The Human Capitalist Series

March 15, 2022 Equity Compensation

The Human Capitalist Series P.1: The Basics

We're excited to introduce a multipart and ongoing series about the basics of (and some advanced topics related to) equity for startup employees and contractors.

Startup - Series The Human Capitalist Series

March 15, 2022 Equity Compensation

The Human Capitalist Series P.10: Early Exercise Stock Options

Normally, a stock option can be exercised only with respect to the vested portion.

Startup - Series The Human Capitalist Series

March 15, 2022 Equity Compensation

The Human Capitalist Series P.11: What Is a Vested Share Repurchase Right, and Why Does It Matter?

Historically, in the world of venture-backed startups, investors and entrepreneurs worked from the shared understanding that, once an employee provided "sweat equity" through their services, such employee was entitled to enjoy the future benefits of that equity.

Startup - Series The Human Capitalist Series

March 15, 2022 Equity Compensation

The Human Capitalist Series P.2: Stock Options

Stock options are the most common form of equity incentive for early-stage startups.

Startup - Series The Human Capitalist Series

March 15, 2022 Equity Compensation

The Human Capitalist Series P.3: How Are Stock Options Taxed, and Which Are Better, Incentive Stock Options or Nonstatutory Stock Options?

The U.S. federal taxation of stock options for U.S. taxpayers depends on whether the options are classified as incentive stock options (ISOs) or nonstatutory stock options (NSOs).

Startup - Series The Human Capitalist Series

March 15, 2022 Equity Compensation

The Human Capitalist Series P.4: Restricted Stock Awards

A stock purchase award (also known simply as "restricted stock") is the sale of a share of stock in exchange for an actual cash payment (or transfer of property with a fair market value that equals the purchase price and which property is not already the company's).

Startup - Series The Human Capitalist Series

March 15, 2022 Equity Compensation

The Human Capitalist Series P.5: Stock Bonus Awards

A stock bonus is the issuance of a share of stock without payment of any purchase price.

Startup - Series The Human Capitalist Series

March 15, 2022 Equity Compensation

The Human Capitalist Series P.6: Restricted Stock Units

Restricted stock units (RSUs) are rights to acquire stock without paying an exercise or purchase price.

Startup - Series The Human Capitalist Series

March 15, 2022 Equity Compensation

The Human Capitalist Series P.7: When Would A Company Use Stock Awards Instead of Stock Options?

We often are asked when a company would use "full value" stock awards (stock purchase, stock bonus, or RSUs) rather than stock options.

Startup - Series The Human Capitalist Series

March 15, 2022 Equity Compensation

The Human Capitalist Series P.8: Q&A on Section 409A Valuations

Internal Code Section 409A attempts to limit and regulate the use of "deferred compensation"—that is, the legally binding right to receive compensation in a future year, after it is no longer subject to a substantial risk of being forfeited by the recipient.

Startup - Series The Human Capitalist Series

March 15, 2022 Equity Compensation

The Human Capitalist Series P.9: Post-Employment Exercise Periods for Stock Options

Holders of stock options must exercise their vested options within a certain predefined time period after they cease providing services to the company.