Get outside support from legal expertsĪfter the key stakeholders are aligned, loop in the experts. If you lead with the business benefits that the changes could have on recruiting, culture and morale, the opportunity for pushback will be limited. This group of individuals usually hold significant equity in the business, so they may be just as invested in the decision as the founders. The first step should be a discussion with your board, likely during the next board meeting. No executive can fully predict the future with absolute certainty.įor businesses that are ready to revamp their employee equity plan, here are a few key lessons we figured out along the way: We don’t believe in declarative statements like “we’ll never go public” or “we’ll never be acquired,” even if well intentioned. We’re also careful to not make promises about the future that would influence decisions, as we saw happen with Mailchimp. With these two programs, we’re not assuming anything about each employee’s personal situation or forcing our beliefs on anyone.

This is a great option for employees that believe strongly in our success and want to reap the tax advantages of buying their shares early on. We crafted a plan that allows employees to exercise their stock early - at any time, in fact. The next component of our program was in response to demand from employees confident in our long-term prospects. Within the next few years, I predict that we’re going to see a shift in how employers approach equity as a benefit and that flexibility will become the norm, rather than the exception. Equity is bound to be the next to change in the battle for talent. As talent wars rage on, companies are getting more competitive on base salary, bonuses, benefits and workplace flexibility. The employee equity status quo isn’t going to work for much longer. The industry has even coined terms like “golden handcuffs” to describe one of the all too common scenarios where employees have millions in stock options but can’t afford the taxes they’d owe to leave their current company before a liquidity event like an IPO or acquisition. Most startups follow a standard playbook for issuing employee equity, but it’s a system riddled with complications. Its 1,200 employees didn’t get any equity in the company and missed out on the life-changing financial upside that would typically come from a deal of this magnitude. Mailchimp made headlines last month when it sold to Intuit for $12 billion, but many of the stories surrounding the news were far from glowing. Colin Turner is co-founder and COO of Postscript, an SMS marketing platform leveraged by thousands of Shopify businesses.

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