Insights and Opinions: Stock Plans: Give the People What They Want

For today's Insights and Opinions piece, we have an article from Lee Weinberg, an attorney, entrepreneur, and angel investor here in Los Angeles, who takes a contrary view on how stock options are granted in the technology world.

I have some strong opinions regarding the ubiquitous Stock Plans/Option Pools of start-up, tech and VC-land. Flame on!

The official goal of a broadly-based stock plan is to motivate the recipients of the stock (or stock options or equivalent) to work harder, stick around, and otherwise put in extra effort with a better attitude that will aid the growth and well-being (value) of the company.

Do broadly-based equity and option plans actually do that?

The theory from 1986-2000 for dot.coms and other (especially technology) growth companies was that equity (mostly in the form of tax-favored Incentive Stock Options, or ISOs) was what employees and officers all wanted and what would motivate them to take a job with and/or outperform for the company. This theory was applied across the board, for all employees, low and high, with the expectation that all would want to row together. After all, the company will IPO and everyone will get rich, right?

We all know how that turned out. (More...)

Read the rest of Lee's article on Stock Plans: Give the People What They Want.