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What’s Their Incentive? Examining Incentive Compensation in Start-ups

March 02, 2022 (1 min read)

Traditional equity incentive compensation for a start-up’s employees, including its founders and other associated persons include grants of stock (restricted or otherwise) and stock options (rights to purchase company stock at a discount in the future). This practice note identifies and discusses restricted stock, incentive stock options, and non-statutory stock options—three of the most common types of equity and equity-based incentive compensation awards issued to a start-up company’s founders and key employees. It also examines the equity incentive compensation plans to which such awards are subject and provides practical guidance and advice for drafting these plans.


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