Stock Option Plan for Contractors?
I'm starting my first company (software for Reputation Management) and will be contracting 3 guys; 2 full-time paid and 1 who is doing work pro bono. As it happens in the early stages of companies, money resources are very limited so I would like to offer incentive stock option plans to those guys (who I'm planning to employ full-time in the future any way). My question is, can I offer them any stock options and if yes, how it will be calculated if they do not have employment contract with my company?
Thank you,
Kamila
1 Answer
You can issue them NQSO (non-incentive stock-options). By definition, ISO can only be issued to employees. Just put in standard vesting based on them having a working relationship with the company (that includes contracting and being employeed), and you are set.
Of course, any stock-option needs to be drafted by competent lawyer, meaning a few thousand dollars of expenses. Don't try to do this at home or you'll mess it up.
Alternatively, you can grant them stock, not options.
-
Thanks a lot. Although, when budget is so tight spending another few thousand pounds (UK) does not sound nice... is there any way I can create agreement stating that I'm going to provide them with stock options let's say starting from the day company generates any money? (day 1 = vesting commencement period of their stock option plan). Until we generate money/go public/IPO these stock options are worth nothing anyway... – Kamila 13 years ago
-
I didn't realize you are asking for advice for the UK, not US - so ignore my discussion of NQSO and ISO, it's US only. – Alain Raynaud 13 years ago
