We are founders, no investment, but considering giving a new person shares to provide support for the business. We will not be able to pay them. What would be an acceptable amount of shares to offer?
Questions
How many shares do we offer?
4 answers from the community
A· Aug 5, 2014
depends on their role, experience and what they can offer to the team. Be sure to have shareholder agreements in place before they create any IP
A· Aug 5, 2014
Equity as compensation deals seldom go well. Usually one party ends up getting a raw deal.
Basically put a present value on your company. $100K? $1M? 100M? Then put a value on their work. Then discount their value of work by X% because your shares would be worth Z in the future. Then divide the number of outstanding shares (shares given out so far) according to the discounted value and you've got the number of shares.
Alternatively, just give them a small slice (less than 1%) and defer the compensation (and maybe promise a multiplier should the company achieve some goals).
A· Aug 6, 2014
I would give them a percentage of the company as a function of how much they can contribute. For example, is the person another you? Give them 25%, why not 50%? Because two-headed businesses don't work. Why not 49%? Because they did not dare to start the company. Any other smaller contributions will go below 25%.
A· Aug 9, 2014
it's illegal to pay them nothing unless they are founders. they can come back and sue you at any time. it will be a factor in due diligence. DO NOT DO IT.