Does Company Equity Entitlement need to be in your employment contract?


1

Should a company equity entitlement be stated in your employment contract?
If not, what entitlement to any equity do you have?
Particularly if you're already employed there?

Contract Equity

asked May 24 '11 at 02:57
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Chester
6 points

2 Answers


2

Equity entitlement needs to be something you can legally enforce, if needed, so it needs to be in writing in some manner. If it's not in the employment contract itself, there needs to be something else.

A couple of years ago, I joined a startup fairly early on, and they were still figuring out lots of legal details. So my offer letter remarked on what percentage of the company I'd get options for, and said a formal options agreement would come later - which it did, after a few months. That was fine with me - if I'd needed to litigate, that offer letter would have been adequate.

But if all you have is a verbal promise, unless other people were present and willing to testify to it in court, that promise is pretty worthless.

answered May 24 '11 at 05:26
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Bob Murphy
2,614 points

0

If you are hiring an employee, and offering them equity, that must definitely be in the contract.

Another question is whether you understand how to, or are able to split equity. There are many legal complexities if you want to get that right.

answered May 24 '11 at 03:16
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Genadinik
1,821 points

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