Q: Hi ! How does equity compensation work at a start up that offers it when you sign on but then gives you no further info?
When I signed my employment contract with the company I work for, my compensation package included about 5% equity in the company (25,000 class B shares). I never got additional information on this at all, just the compensation package I signed. What I signed said the equity is subject to board approval with further documents to be sent to me within 30 days. It's been 7 months. Where do I stand? Since they missed their deadline by a mile, do I own the equity, or am I stuck renegotiating because the company is being sloppily run?
P.S, if your answer is going to be something along the lines of “put the company first. Your boss is too busy to hold up his end of your compensation” like the first answer, please don’t respond. This employer has a history of not following thru on their word. This is a valid question.
A:
The most common aspect of any "start-up company" is that the owners (those who own 100% of the common stock) work their fingers to the bone day and night, week in and week out, hoping that their (often unpaid) efforts will pay off.
The main job of the newly-hired employees is to work hard and help the ship stay on top of the waves because if the ship goes down, your 25,000 Class B shares will be flotsam.
Unless the owners of this start-up are not humans they are not concerned about the details required to record and issue actual share certificates (which are not required) just so the new employees won't gripe. And the very last thing any employee in a start-up should do is ask any unnecessary questions that lead the owners to believe that the new employee is more worried about their personal stuff than about the business stuff they are paid to worry about.
Advice from an experienced lawyer who has helped many start-ups stay afloat: Do not make waves.
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