The First Hires: Basics of Equity Incentive Plans for Startups by Doug Bend and Brandon Shelton

When a new startup forms, there is often a great deal of confusion around who owns the company, and how equity can be provided to the company’s first employees. This presentation will begin by identifying how a company’s founders take ownership, and how they should plan for the future new hires. It will then walk through the most common early types of equity issued to early employees, including restricted stock awards, options, and early exercisable options.

Following a good understanding of these types of employee and service provider grants, we will then discuss the responsibilities of the company with respect to issuing and receiving shares. In particular, we will discuss the importance of a 409A valuation, and the 83(b) election. The slides will be explained by showing hypothetical examples of a startup that is contemplating issuing shares of stock to its founders and its early employees, and ways in which those employees could help or hurt themselves in relation to their responsibilities as stockholders.

Please note this video is not offered for MCLE credit. We are only authorized to give credit to those who attend at the time of the presentation.