Stock Options for staff ?

[big ant]

We are small privately owned firm, with 3 working shareholders (25%, 37.5%, 37.5%) and 2 more Directors...plus maybe 8 Senior Managers leading teams.

How to retain Senior staff, hire new ones too....where they want a piece of the firm (Shares, or Options ?)...and accordingly, a share of the end of year distributable profits ?

How does this work in practice ? Is there a simple guide, or someone explain an example.

Any clues appreciated.

Big Ant

[southendpier]

your business your risk your shares.

Keep the shares always. You don't need minority shareholders, they are a pain.

Give em cash, profits etc. never shares. T

[Olf]

You need to look at the different share type that you can issue - e.g. non-voting shares that will give you the protection you need but the remuneration/stake they want.

[Cheib]

southendpier said:

your business your risk your shares.

Keep the shares always. You don't need minority shareholders, they are a pain.

Give em cash, profits etc. never shares. T

This.

Give them a profit share not shares. I wouldn't give them it all straight away though....maybe 30% of their profit share at the end of the year with the rest vesting over the next two or three years. That way you get something out of it too....i.e. staff loyalty and also working capital for the company unless you put it in escrow obviously (which I wouldn't).

You could also have a claw back if the company loses money the following year then.

[big ant]

Thanks, construction makes sense.
In foreseeable future IPOs or buy-outs are unrealistic, so main driver for such claims are P&Lshare.

The scenario these Directors presented was: if they landed the it account, why bring it to the firm...take it for themselves.
I should shoot the sod on Monday !

But the issue remains, if someone has the potential to land the game changer, how to motivate.

Big Ant

[southendpier]

salesmen are not business owners. they think they are and always say tueybcould set up and take you on or out. Keep a good salesman, pay him more than you pay yourself. Don't ever EVER GIVE away your shares.

If he has the coin you may want to sell to him.....

if he threatens to leave fk him salesmen are everywhere, entrepeneurs are scarce. That is the difference. Work out his strengths and replicate him.

As you may have worked out employees wanting then getting shares is simply a no no with me.

[Cheib]

Well what I would do is give them a profit share with deferral over two or three years as I mentioned above. I'd also put in non-compete clause into their contracts.....there are ways around them but again it should help you retain key staff/ make it harder for competitors to hire them.