Accelerated vesting allows an employee to speed up the schedule for gaining access to their equity compensation as an incentive.
An acquihire is when a company is bought primarily for the skills and expertise of its staff, rather than the actual product or services.
An acquisition is a type of exit event for startups that occurs when your company is purchased by another company.
Capital gains are the amount owed on a profit that an investor makes when an investment is sold.
A cap table is a table that shows the breakdown of a company's shareholders' equity.
Dilution is something that occurs when more shares are issued, lowering your percentage of ownership in the company.
Employee stock options are a facet of a compensation contract that permits the employee the option to purchase equity in the company.
Equity Compensation is a portion of your total compensation that is given in the form of equity rather than in cash.
When evaluating startup offers it is important to understand and evaluate all aspects of your respective offers in order to choose the offer you think is best for you. Here are some important questions to consider.
Golden handcuffs are a common retention technique for senior executives when their company is acquired - they only receive payment for their shares if they stay at the acquiring company.
A golden parachute is a type of severance compensation paid out to company executives after termination of employment.
Incentive Stock Options give you the right, but not the obligation to purchase equity.
A liquidation event occurs when the company is either acquired or becomes a public company through an IPO, direct listing, SPAC, or goes out of business.
A liquidation preference is a specific clause that dictates the payout order in the case of a corporate liquidation.
A lock up period is a a period of fixed duration that often follows a public listing in which you typically cannot sell your shares.
Preferred share price is typically determined when a company raises a round - it's whatever the investors are willing to pay.
Preferred stock is similar to common stock, or equity in the company, but it is typically reserved for investors and comes with additional rights and protections often resulting in a higher value than common shares.
Prepaid variable forward contracts are complex financial instruments that can be used by shareholders to get liquidity without selling, but are often expensive when compared to other liquidity alternatives.
Restricted stock awards allow you to take ownership of equity immediately, but are often reserved for founders.
Restricted stock units are an agreement from a company to issue shares or the cash value of shares at a future date. They are frequently granted to employees as incentives.
A reverse merger is when a private company acquires a public company, effectively bypassing the lengthy process of going public.
Secondary Market Transactions are when shares of private stock are being sold to another buyer. This is different than a primary transaction because the shares are not coming directly from the company.
Share class is the type of equity granted, with common typically being the lowest class of share.
Shareholders agreements established certain rights and responsibilities of founders and the board of directors.
Short-term capital gains tax is the the tax rate for assets that have appreciated in value and have been held for less than one year.
The Secured Overnight Financing Rate is a secured interbank overnight interest rate used as a benchmark rate in many types of credit transactions.
A SPAC, or Special Purpose Acquisition Company, is a special type of public company designed to acquire another company.
A stock purchase agreement is a legally binding contract between shareholders and companies that outline all of the terms and conditions related to the sale of a company's stock.
A stock split is an issuance of new shares in a company to existing shareholders in the same proportion to their current holding size.
A tender offer is a bid to purchase some or all of a shareholders' stock in a private corporation. These can be extended to all employees, or a select group of individuals.
Total compensation includes all of the monetary incentives a company provides the employee with in return for work. Most often, they include your base salary, a bonus, equity, and benefits.
A vesting cliff is the period of time before you acquire ownership rights to the equity portion of your total compensation.