In previous decades, stock options in Florida were mostly given out to executives and others at the top of the corporate ladder. These were a way for high-level employees to be compensated by running the company well and helping the overall value to increase. These days, however, things have shifted so that some companies are using stock options as employee compensation, even for entry-level employees. Besides, nothing is really stopping someone from personally investing in a certain companies stocks as long as they feature on a stock market around the world somewhere. For example, if you’re wanting to start looking into trading stocks for potential profit then try it bei kryptoszene.de or a similar website where you’re able to purchase stocks.
In fact, the National Center for Employee Ownership ran the numbers for 2010 and found that around 36 percent of employees had stock in the companies that they worked for, using various plans to obtain it. This was for publicly traded companies.
This tactic is used by all types of companies, but it is especially useful, in many cases, for start-up companies. These start-ups typically do not have that much cash on hand, so they can’t offer high wages. However, they have a lot of work that needs to be done if the company is going to grow. As a result, they often provide other forms of compensation in lieu of high salaries. A life insurance policy is one option. Today, startup owners often provide their employees with group life insurance through a broker as part of employee benefits (see “why you do not need an insurance broker” for more information). In the same way, many small business owners also consider stock options for compensation.
Offering stock options means they do not lose any cash immediately, but workers still feel like they are being compensated well beyond their hourly rate. If the company blows up and sees dramatic growth, this can be a way for employees to make way more than their base salaries, but there is no risk to the employers. Those employers may “lose” money down the line, but they’re still gaining overall since the company would never have seen that growth without dedicated employees.
In order to use stock options as employee compensation, these start-ups need to prove what the fair market value of their common stock is. The easiest and most common way to do this is to have a qualified, independent valuation provider carry out a 409a valuation. It is best for these start-up companies to find a provider who has experience in valuing companies that are similar to theirs.
When signing a contract, be sure that you know exactly how you’ll be compensated for your time, considering wages, stock options, benefits and more.
Source: CNN Money, “How to handle employee stock options,” accessed June 04, 2015
