Hello, esteemed company co-founders, executives, early-stage team members, and others with applicable knowledge! My team believes that all contributors committed to the work we do deserve some level of ownership in the company and are entitled to a share in the proverbial fruit that is borne from that work. Additionally, we find that such ownership can be a great motivator for diligence in the work done and that it furthers the building of a team designed to support one another. In our case, our team is primarily made up as I-9 contractors and even volunteers with myself being the only full-time employee. While many companies agree to a certain allocation of equity with an attached vesting schedule when a new team member is onboarded, this approach doesn’t make sense for a team whose members may work vastly different numbers of hours. Following this premise, I am working on formalizing an idea that would allow early-stage team members to accrue equity on an hourly basis, similar to employees beholden to a corporation accruing vacation time. Take the following as an example: the rate of equity accrual is set at 0.009615% equity per hour worked. This accrual rate means that at 520 hours of work, a team member would hold 0.5% equity in the company. 520 hours of work represents 40 hr/week for 13 weeks, or three months. At 20,800 hours of work, a team member would hold 20% equity in the company. 20,800 hours of work represents 10 years of full-time work with the company (not allowing for any vacation nor holiday time). In order for equity allocation to occur, a vesting threshold of 520 hr or 0.5% equity must be reached. This is to ensure some level of commitment to the company over an extended period of time. The only maximum cap on equity that can be accrued is full exhaustion of a pre-determined equity pool. I think this example illustrates the basic idea. What problems do you see with it? I, nor a few other folks who I have run this by, have seen a framework like this in practice. Have you, dear LinkedIn connection? I have no idea how to formalize it with the proper legal and financial structures in place. If you happen to have a document outlining something similar, whether it provides a high-level overview or a detailed implementation plan, and you could share said document with me, I would be incredibly grateful. Would love to hear your thoughts!
Director of Fund Development
4moMilestone is a great place to work.