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For a small private company, you might consider using phantom stock that vests and becomes real equity if the company is sold or upon some other triggering event. It allows key employees to feel invested, but avoids pitfalls for you of having a bunch of tiny percentage minority shareholders. Depending on your state laws, they may end up with rights as minroity shareholders that you don't want to give up. Also, being a minority shareholder in a private company is pretty worthless. The only real benefit for them is a nice payday when the owner sells out.
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