Re-evaluate founders' equity?

Posted by nickh on Tuesday March 22, 2011 @04:57PM
from the self-post dept.

When founders divide a startup's equity amongst themselves, are those numbers set in stone (ignoring future dilution)?

I ask this because one of my co-founders has been pondering whether we founders should re-evaluate each founder's shares at regular intervals, based upon on how much work they've put in since the last re-evaluation.

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Re:Re-evaluate founders' equity? by bootdaddy on Tuesday March 22, 2011 @05:56PM (#2356713)

It depends on how the company is set up.

If the total stock was allocated then it may be a tax issue to change.

The best option may be to have vesting periods that can then be accelerted based upon workload/responsibilities.

The other option may be to "contribute" stock into new corp or LLC, but again, looking at tax issues. I did this and it was not easy...

Or contribute assets (code etc) only (not stock) into new entity and close down the old company.

Or issue more shares enabling a vesting period (may be simplest thing).

Definitely consult with a qualified business accountant to avoid what could be major headaches and possible tax penalties.

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