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As a founder who's been through a liquidation event, I have to say that stock options are a terrible way to reward employees. The tax issues alone (not to menti
by DanielShir 11y ago
As a founder who's been through a liquidation event, I have to say that stock options are a terrible way to reward employees. The tax issues alone (not to mention all the other stuff mentioned in this thread) are a huge pain for most ordinary people. The only reason companies use this is that there's no better alternative... Anyone ever encounter some other financial instrument that's possible to use in this situation?
- dman 11y agoPerhaps issue a interest bearing senior bond to the employee in return for services rendered?
- maneesh 11y agoBonuses based on how well the company does. I.e. $1,500 bonus per $MM in revenue, each year
- yasth 11y agoThese cause huge cyclical attrition and mess with everything every vest/payout. Also if that is written to the contract as a formula it is a huge reason to lay off old employees, because as the company grows one expects the MM to grow larger. If it isn't written into the contract it is a crappy way to reward the initial brave few as initial revenue will be negligible and their share will decrease as the company grows.
- awinder 11y agoHow about exceptional 401k contributions? I believe the employer / employee contribution limit is around 50K / year, as an employee I feel like it'd be much clearer cut & less arduous if an employer just dumped extra money into a retirement vehicle, it's tax deductible by the business and the tax ramifications for employees is much clearer.
- steven2012 11y agoRSUs are far better, especially for a later stage company.