options - The 411 On Startups (tm)

Stock Options versus Stock Warrants – What’s the Difference?

May

2013

I frequently hear clients and some of their advisers talk about “stock options” and “stock warrants” and there is often considerable confusion between the two. In this post, I’ll briefly describe the major distinctions between these instruments and how each can be used in a privately held company. Stock options are issued to key employees, ...

What is an 83(b) election? Restricted Stock Implications: Startup Company Lawyer

Nov

2008

Failing to make a timely 83(b) election with the IRS is something that could lead to disastrous tax consequences for a startup company founder or employee. Founders typically purchase stock pursuant to restricted stock purchase agreements that allow the company to repurchase “unvested” stock upon termination of employment. Similarly, employees may “early” exercise options subject ...

What is preferred stock and why is it issued to investors? : Startup Company Lawyer

Oct

2008

(Note: read the comments on this blog page.) Preferred stock generally has rights senior to common stock. Startup companies typically issue common stock to founders (and options to purchase common stock to employees) and preferred stock to investors. One reason for issuing preferred stock to investors is to preserve the ability of a company to ...

What entrepreneurs need to know about Founders’ Stock — Lightspeed Venture Partners Blog

Sep

2008

When entrepreneurs start a company, there are four things they need to know about their stock in the company:* Vesting schedule* Acceleration of Vesting* Tax traps* Potential for future liquidity

Restricted Stock Better Than Stock Options

Sep

2008

Many companies are concerned by the Financial Accounting Standards Board (FASB) recommendation that stock options be shown on the company’s expense sheet. Especially high-tech and start-up companies are concerned because they fear losing one of their great motivating tools. They needn’t worry. There is already a better compensation choice, restricted stock options.

Restricted Stock FAQ

Sep

2008

Question: What is restricted stock?Answer: Stock is ownership of a company. When that stock has limitations on it, it is said to be restricted. Question: What kind of restrictions?Answer: One of the most common restrictions requires a certain length of time to pass or a certain goal to be achieved before the stock can be ...

How Should I Compensate an Advisory Board? | Company Activities & Management > Company Structures & Ownership from AllBusiness.com

Sep

2008

Depending on the stage of development and the type of business, there are different ways of compensating your advisory board. So let’s get practical. First, a few assumptions: you are a startup and there have been relatively few stock transactions, but the stock should have value in the future, either through an IPO or merger. ...

Advisory Board Compensation for your Startup : Texas Startup Blog

Sep

2008

The normal advisor gets 0.1%-0.25% of a company’s post-Series A stock. Normal advisors do something important for the company and aren’t expected to do much beyond that. For example, they introduce the company to a key customer or investor. The super advisor can get as much stock as a board member: 1%-2% of a company’s ...

Stock options, employee stock purchase plans, ESPPs, restricted stock, restricted stock units, RSUs, stock appreciation

Aug

2008

Making you smarter about stock options, incentive stock options, employee stock purchase plans, ESPPs, restricted stock, restricted stock units, RSUs, stock appreciation rights, SARs, performance shares, and other stock compensation for employees and executives.

How to prepare a good plan for granting stock options to employees in Startups.

Aug

2008

Following are Four steps in Planning and Distribution of Stocks in Startups.(A) Forecast all the rounds of venture capital you will need up to the day you go IPO. You will need several rounds of financing, typically three in three years. It can be several more. Life science requires at least twice that number of ...