Work For Equity Application
Application of Work for Equity
Work for Equity is applicable depending on the choice of the Management and also on the employee. If Management decides to offer work for equity option in order to sustain the growth of the company without any cash flow problems, the employee can either opt for it or decide to go in for cash for compensation. Work for equity is useful to people who are young and hardworking as they have more probability of their equity growing and on a later date become substantial amount. However, it may not be worthy for senior people who are already at the highest salary brackets and not willing to work hard to get equity options.
It is also true that start-ups may apply work for equity based on performance criteria. Work for Equity will be based on certain conditions like vesting period, separation criteria etc. When you apply for work for equity option be clear on the nature of equity, vesting period and also formalize the equity through an agreement in writing so that there is no ambiguity. It is also very important to be clear on the separation terms and on what conditions you can break the agreement or the management’s powers to remove a person from his role. You should make sure the fine print does not take away any of the benefits that are available with work for equity. It should be applicable to the best interests of both the management and employee.
In essence, work for equity application is the choice of management to issue and employee to accept after understanding the conditions so that both the parties have long term win-win relationship.
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