Coming soon · Book Profile
Entrepreneurs Guide Equity Compensation
A practical guide to the full spectrum of employee equity-compensation vehicles and, more importantly, to the culture-building practices that turn stock ownership into superior business performance.
A profile of this book is on the way.
What it’s about
Written by the employee-ownership consulting staff of the Beyster Institute at UC San Diego, The Entrepreneur's Guide to Equity Compensation demystifies stock grants, stock purchase programs, stock options, ESPPs, ESOPs, 401(k) stock, deferred compensation, and synthetic equity, then situates all of them inside a seven-step 'Equity Sharing Journey.' Grounded in decades of consulting with hundreds of companies and in academic research showing productivity and growth gains for equity-sharing firms, the book argues that simply adopting a plan is not enough: real performance gains come only when leaders select the right vehicle for their goals and then build an 'ownership culture' by educating employees, sharing financial information, and inviting participation. Entrepreneurs, executives, advisors, and investors get a clear map through complex tax, accounting, securities, and international considerations plus the human dynamics needed to make ownership 'real' for employees.
The through-line
- Who it’s for
- An entrepreneur or executive who wants to build a high-performing, competitive company and get more out of the people on whom the business depends.
- The problem
- They need to recruit, retain, and motivate top talent while managing cash, taxes, dilution, and legal complexity. They feel that success is maddeningly dependent on others and worry about giving away control, disclosing information, or picking the wrong plan.
- The plan
- Define a vision and objectives for equity sharing.
- Address owners' fears and concerns about equity sharing.
- Review the available tools for sharing equity.
- Select the right tools and create the program.
- Implement the program with experienced professional advisors.
- The payoff
- A galvanized, informed workforce that thinks and acts like owners. · Higher productivity, profitability, retention, and company value. · Liquidity and wealth-building opportunities for owners and employees alike.
See our guide
Related profiles we’ve built
Additional reading
- IRS and SEC Legal Code (via Cornell Law School Legal Information Institute) · U.S. Government
Provides the primary source for the specific rules governing equity compensation discussed in the book, such as IRC Section 83(b), Section 422 (for ISOs), Section 409A, and SEC Rule 701.
- VentureHacks.com · Nivi and Naval
Cited as a source of 'good advice for startups,' specifically for providing benchmarks on appropriate equity grants for advisors.
- AngelList (angel.co/salaries) · AngelList
Mentioned as a key resource for both founders and employees to research and benchmark typical salary and equity data for various startup roles, ensuring offers are competitive.
- The Open Guide to Equity Compensation · GitHub community (jlevy)
Listed in the end notes as a resource, suggesting it provides more in-depth or community-driven information on the topic.
- Clerky.com · Clerky
Referenced as a provider of streamlined legal documents for startups, including a set of stock plan forms developed in collaboration with Y Combinator and Orrick.
- Crunchbase.com · Crunchbase
Listed in the end notes as a platform for finding business information about private and public companies, useful for general research.
- Founder’s Pocket Guide: Startup Valuation · 1x1 Media (implied)
Expands on a core topic of the cap table guide, covering various valuation methods for arriving at a defensible pre-money valuation.
- Founder’s Pocket Guide: Convertible Debt · 1x1 Media (implied)
Provides details on convertible debt, a funding structure mentioned as a key item to be tracked on a cap table before it converts to equity.
- Founder’s Pocket Guide: Terms Sheets and Preferred Shares · 1x1 Media (implied)
Details the rights, preferences, and protections of preferred shares, which are critical for accurately modeling exit scenarios in more sophisticated cap tables.
- Founder’s Pocket Guide: Stock Options and Vesting · 1x1 Media (implied)
Explains how to structure and track stock options and vesting, which are managed within the option pool recorded on the cap table.