With the growth of a start-up it becomes important to surround you with the best possible people. A way of attracting highly talented and motivated people is by offering them a piece of the (future) equity/stock of the company.
A stock option gives the employee or consultant a right to acquire shares of a company at a predetermined price. It stands often next to the compensation in cash. If the company is doing very well and has issued and granted stock at a certain valuation, which over time has multiplied, stock options can outweigh the cash compensation for the performed work by far.
3. For everybody?
Some founders/companies have an employee-equity-driven mentality, and they offer stock options to all the employees. Others only want to reserve these options for the top performers or executives. In any case, options come with a vesting period and quite some other conditions and (tax) regulations.
At Mace we guide you through the legal framework of stock options and stock option plans.