Startup Employee Stock Options

Posted by on June 8, 2011 at 7:40 am.

John NesheimI’ve wanted to share a post about entrepreneur stock option planning for some time; one of the standard discussions I have with every founder

4 Comments

  • Very nice and expertise-filled layout of for stock options. A great many of entrepreneurs are at a loss in terms of how to deal with options. I think the most important part of what you outlined is categorizing employees. Once that vital part has been done, it’s easier to determine share-distribution.

  • Sean Mel says:

    We need a simple model to help us properly slice the pie. It needs to be flexible and fair. By fair I mean it needs to give each founder what they deserve. And by flexible I mean it needs to adapt over time to re-allocate the startup equity so that the distribution stays fair until the fledgling company takes flight. check out Mike Moyer’sbook slicing pie it talks about 50/50 share and how to divide it through his grunt calculator.

  • John Elbaum says:

    That’s some nice input on stock options. I never realized how much thought needs to be put into it.
    I find that many entrepreneur companies use stock options also as a means of keeping new employees from jumping ship or being head-hunted for highly seeked positions.
    They offer a certain number of options, but state that these options can only be exercised within a year (or other timeframe) after the IPO, or depending on how long the employee has been with the company. This makes it financially worthwhile for the employee to stay at the company, even if a competitor offers more attractive financial compensation.

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