Next Case
Ash, Hilary
Shreeya Goel
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Shreeya Goel
Ash, Hilary
Meltzer, Justin
Sent: Saturday, October 13, 2012 9:53 PM
To: 203mg...@googlegroups.com
Subject: Re: Next Case
Reply-To: "203mg...@googlegroups.com" <203mg...@googlegroups.com>
Date: Saturday, October 13, 2012 9:23 PM
To: "203mg...@googlegroups.com" <203mg...@googlegroups.com>
Subject: Re: Next Case
--Hey guys,
When should we meet tomorrow? I have chapter at 8 so could we meet before that?
Thanks,Hilary
Shreeya Goel
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Michael Bear
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Meltzer, Justin
Sent: Sunday, October 14, 2012 12:48 AM
Michael Bear
Here's 5 and 6 - Justin are you submitting it?
5.) Daniel’s proposal to be granted “refreshment” options after this round of investment is unreasonable from the perspectives of both the company and investors. First, the other founders would object to this situation because this would further dilute them and not come at a cost to Daniel. Why should he be given this special allocation over them? The investors would not support this either because they are paying to establish an ownership interest and assume risk. This grant to Daniel would progressively dilute their equity interest unless they made further investment. Limiting founder equity could also be necessary should Daniel not be able to fulfill his duties and another manager must be hired.
6.) 100% acceleration of her stock options is reasonable should she be wrongfully terminated as equity was authorized to her to compensate for her transferred IPO. In this case, she deserves her fully vested shares. On the other hand, the three-year employment guarantee is not reasonable because it is irrespective of her ownership interest and could misalign incentives. Even though she has given her IP to the company, she could continue to earn salary without performing her duties. This could endanger the execution of the business plan and the pursuance of various milestones.
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Shreeya Goel
Justin Meltzer
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Michael Bear
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Shreeya Goel
Shreeya Goel
3.
There are some concerns with bringing in Melissa’s friends at 0.001 per share:
- They are not bringing anything
new (IP) or sweat equity but rather joining on after the development, planning,
and fundraising that has occurred since that share price was applied.
- This may upset other employees and set a bad precedent as it is a decision
based on personal rather than professional considerations.
- Time horizon; not only is that original price per share no longer applicable
but may be further skewed by changes over the next 6 months.
Alternatives:
- buy in at current price per share
- partially purchase at current price per share, partially purchase in the form
of stock options
- for same deal, they should bring in IP or something with value comparable to
what she brought to be given same
price per share.
4.
Limited to director-level
and above, because
- considering the difficulty of hiring talent, it can be used as a valuable
component of a compensation package; cannot thus be granted to everyone.
- Officers are the most influential in projecting milestones, managing
development, and determining strategy so linking the two makes it easier to
determine executive incentives and measure success.
Considering time at hire and rise in share price after investment, these shares should be authorized at fixed proportion of the market value of share price: 0.5% (based on the current relationship between Sanjay’s incentive equity ($0.01/share) and current share price to investors of $1.95.