In this long-form post published on LinkedIn Pulse and titled “10% of the Company, or My Favorite Option Grant Mistake”, Ran Dimant of Katzenell Dimant describes some typical mistakes in granting Employee Stock Options (ESOs) and shares his personal favorite.
I had the pleasure of working with Ran and providing Editorial Services for this piece.
Ran Dimant is a Founding Partner of Katzenell Dimant and provides strategic and practical legal advice to public and private companies, equity crowdfunding platforms, startups, founders, investors and various business initiatives.
From the post: “10% of the Company, or My Favorite Option Grant Mistake“:
“Many mistakes can be made when granting employee stock options (ESOs), but while most will cause damage measured in dollars and cents, there is one major mistake that, in addition to having financial consequences – can hinder the company’s ability to manage its equity, and that, my friends, is dramatic.
The Nature of ESOs
We all know ESOs are the preferred incentive of fast-growing companies, elegantly linking remuneration to success without burdening cash-flow. From a legal aspect, it’s important to understand that ESOs are “compensation contracts” between an employer and an employee, and the rights and obligations of the parties are on the contractual level.
It is this nature that makes most ESO grant mistakes relatively simple to resolve, at least from a legal standpoint.”
Link to the full post