Showing Andrew Shawbers posts

The Human Capitalist Series P.1: The Basics

We’re excited to introduce a multipart and ongoing series about the basics of (and some advanced topics related to) equity for startup employees and contractors. The “Human Capital” aspect of any enterprise, especially a technology company, is its most valuable asset, and we hope to highlight the […]

The Human Capitalist Series P.2: Stock Options

Stock options are the most common form of equity incentive for early-stage startups. A stock option grants the option holder the right to purchase a specific number of shares of the company within a fixed period of time at a preset “exercise” price, generally following the satisfaction […]

The Human Capitalist Series P.4: Restricted Stock Awards

A stock purchase award (also known simply as “restricted stock”) is the sale of a share of stock in exchange for an actual cash payment (or transfer of property with a fair market value that equals the purchase price and which property is not already the company’s). […]

The Human Capitalist Series P.5: Stock Bonus Awards

A stock bonus is the issuance of a share of stock without payment of any purchase price. The stock bonus can be granted subject to vesting or can be granted fully vested, such as in satisfaction of prior services rendered or as an alternative form of payment […]

The Human Capitalist Series P.6: Restricted Stock Units

Restricted stock units (RSUs) are rights to acquire stock without paying an exercise or purchase price. Vesting and settlement must comply with Internal Revenue Code Section 409A. Generally, shares must be issued (and taxation triggered) shortly after the vesting date. While private companies commonly use a liquidity […]

The Human Capitalist Series P.8: Q&A on Section 409A Valuations

What is the purpose of Section 409A? Internal Code Section 409A attempts to limit and regulate the use of “deferred compensation”—that is, the legally binding right to receive compensation in a future year, after it is no longer subject to a substantial risk of being forfeited by […]

The Human Capitalist Series P.10: Early Exercise Stock Options

Normally, a stock option can be exercised only with respect to the vested portion. “Early exercise” stock options allow a service provider (employee, contractor, etc.) to exercise a stock option with respect to some or all of the unvested portion. The early exercised shares are shares of […]