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Structuring stock for employees of start up

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tondeaf

Junior Member
What is the name of your state (only U.S. law)? General

Hi, we are starting a new company.

The founders want to retain common stock, together with the investor.

They want to grant employees a portion of the profits based on stock or another principle.

Are there any models we can use with preferred or other types of stock to grant key employees dividends and corporate ownership from the initial founding of the company?

Thank you!
 


20pilot

Member
It is typical to give key employees stock options that vest over several years. 5 Years is common. Usually 20% vests at the end of the first year, then 5% after every quarter.

If you want to play games with different stock classes and dividents for certain stockholders, you need to hire an attorney that is up on business law. All it takes is one disgruntal employee or unhappy investor to cause you a ton of problems. The more complicated you make things, the more damage they can do. Keep it simple.

There is a second side to this. If you keep it simple, everyone understands it. If you make things complicated, employees/investors will have a harder time understanding it. A person who is merely suspicious of you looks at a complicated business structure and is convinced that you are hiding something. That person will create more problems for you than a person who believes that you are fundamentally dishonest, but can understand how the business is setup and can see that there are no problems.
 

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