Giving employees an ownership interest in the corporation has become extremely common.  From the point of view of the corporation, stock-based compensation may permit a business to attract and retain key employees while conserving precious cash.  Making employees owners may also give them a greater incentive to work for long-term enhancement of the corporation’s value by giving them a share of the future upside.

As an employee of a closely held business, be careful that you understand the motivation(s) of the ownership group granting the shares.  You gain legal rights as an owner and are generally entitled to inspect the corporate records, receive and attend shareholder meetings and challenge or question board decisions by legal action and otherwise.

At the minimum you should be receiving quarterly financials including balance sheet, income statement and cash flows.  DO NOT ACCEPT ANYTHING ELSE.  You would not invest your money in the stock market and not receive this information, do not put your full trust in your company leadership.  TRUST BUT VERIFY. 

Have all documents reviewed by your attorney.  Keep in mind, the menu (documents) are not created by the company in your best interest.

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