Founder’s Stock – What It Is and Why You Want It

Introduction to Founder’s Stock Starting a company is an exhilarating journey, filled with dreams and ambitions. As a founder, you pour your heart into building something from the ground up. But as you’re navigating this exciting path, have you ever wondered what happens to that initial investment of time and effort? That’s where founders stock […]

Making the Decision Whether to Exercise Stock Options After Termination of Employment

Navigating the world of stock options can be a tricky endeavor, especially when your employment status changes. If you’ve recently faced termination, you might find yourself at a crossroads: should you exercise those stock options or let them go? The decision could significantly impact your financial future. With the right information and careful consideration, you […]

The Art of Negotiating Executive Severance Packages

Are you an executive navigating the complexities of severance packages? Negotiating your way through this pivotal moment in your career can be both daunting and empowering. Understanding the art of negotiating executive severance packages is essential to ensure a fair deal that aligns with your worth and contributions. Join us as we delve into strategies, […]

SEC Rule 10b-5

Section 10(b) of the Exchange Act of 1934, 15 U.S.C. § 78j(b), makes it unlawful “for any person . . . [t]o use or employ, in connection with the purchase or sale of any security . . . any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission […]

What is a lock-up period?

Lockup agreements prohibit company insiders—including employees, their friends and family, and venture capitalists—from selling their shares for a set period of time.  In other words, the shares are “locked up.”  Before a company goes public, the company and its underwriter typically enter into a lockup agreement to ensure that shares owned by these insiders don’t […]

What’s an RSU?

Restricted Stock Units are unsecured, unfunded promises to pay cash or stock in the future and are considered nonqualified deferred compensation subject to IRC §§ 3121(v)(2), 451 and 409A. Typically, one Restricted Stock Unit represents one share of actual stock.  Restricted Stock Units generally are not taxable at grant if they meet the requirements of, […]

What are SARs?

Stock Appreciation Rights are a method of compensating employees or independent contractors.  A Stock Appreciation Right (SAR) is an arrangement, during a specified period, which the employee has the right to receive the increased value of the employer’s stock by cashing out or exercising the SAR. The employee can only benefit from the appreciation in […]

What is phantom stock?

A Phantom Stock Plan is an arrangement under which deferred amounts are determined by a reference to hypothetical “phantom” shares of the employer’s stock without ever issuing the actual shares to the employee.  Depending on the terms of the arrangement, the employee may be entitled to receive only the growth in the value of the […]

ISO or NSO?

If you receive an option to buy stock as payment for your services, you may have income when you receive the option, when you exercise the option, or when you dispose of the option or stock received when you exercise the option. There are two types of stock options: Options granted under an employee stock […]

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