One of the key issue is that most people do not know or understand how the equity piece works, leaving the door opened for abuse.
It doesn't have to be complicated. Two things to check if one is granted equity or options:
- What is the rough value of the stock when granted? 409A is the tool for that although it is usually quite conservative, which is good for the recipient.
- Do I have the same class of stock as management/founders: ensures no funny business around dilution.
One of the key issue is that most people do not know or understand how the equity piece works, leaving the door opened for abuse.
It doesn't have to be complicated. Two things to check if one is granted equity or options: - What is the rough value of the stock when granted? 409A is the tool for that although it is usually quite conservative, which is good for the recipient. - Do I have the same class of stock as management/founders: ensures no funny business around dilution.