In a blog post series published on our WilmerHale Launch site, Partners Ciara Baker and Kim Wethly take a close look at startup stock options. Part I provides a high-level summary of stock option basics.
Excerpt: “In recent years, and at least in part due to the extremely tight labor market, private companies have increasingly been faced with the question of if (and how) they should make their equity incentive programs more attractive. Equity compensation, and specifically, the grant of stock options, has long been a critical component of a startup company’s compensation package, giving employees the ability to participate in the company’s success while preserving the company’s cash for R&D and other business needs. But today offering to grant an employee, and perhaps particularly an executive candidate, an option is likely to be met with requests for preferential terms beyond those historically seen in plain vanilla option programs....
...In this first part, however, we focus on stock option basics, including what stock options are, how they serve as a valuable tool to recruit, retain and incentivize employees (and other service providers) and what their tax consequences are. Much of the information included in this Part 1 can be found elsewhere on WH Launch – we pull it all together for you here as a grounding in these concepts will be useful as we explore the topics described above in later posts.”
