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Ask Me! Exciting Event Coming Up

  • 1.  Ask Me! Exciting Event Coming Up

    Posted 03-19-2025 08:56

    Hey everyone!

    I'm so excited to invite you to Ask an Expert: Equity Strategies for Private Companies, happening next Wednesday, March 26th! If you haven't signed up yet, be sure to register now through this link: Registration - Carta Community Site to save your spot-I'd love for you to join us!

    During the event, we'll be diving into some really valuable topics, and I'm especially looking forward to discussing my favorite areas: ensuring a solid understanding and appreciation of equity compensation, sharing tips on plan design, and exploring ways to create an ownership culture within your organization. It's going to be a great session, and I can't wait to connect with all of you.

    If you have any questions about the event or anything you'd like to hear more about, drop them in the comments below. I'll be answering them live during the session, and it'll be a great opportunity to make sure we're covering what's most important to you!

    Robyn 



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    Robyn Shutak
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  • 2.  RE: Ask Me! Exciting Event Coming Up

    This message was posted by a user wishing to remain anonymous
    Posted 03-19-2025 12:42
    This message was posted by a user wishing to remain anonymous

    Fro context: A 25+ year old very successful company has brought in a new exectutive team to take it to the next level. Any former equity plans had been retired or bought out. As a result, the owner is reticent to had out signifncant equity until he sees the value growth. How can you best position an equity plan in this environment? What are some best practice strategies for building value in this component of compensation? Grants are smaller and excercise price is realitvely high compared ot tradition start-up equity.


    Original Message


  • 3.  RE: Ask Me! Exciting Event Coming Up

    Posted 03-21-2025 07:39

    Thank you for your question. I can talk to this further during the session. In the meantime, I totally get where the owner is coming from-this is a successful, long-standing company with a new executive team, and the owner wants to see tangible growth and value before giving away too much equity. It's understandable, especially since prior equity plans have been retired or bought out.

     

    That said, it's important to keep in mind how powerful an equity plan can be, both for motivating the leadership team and fueling the company's long-term growth. Here are a few ideas on how to position the equity plan effectively in this environment:

     

    1. Tie Equity to Long-Term Performance
      One way to ease concerns is to align equity grants with performance goals. This could be around growth targets, like revenue milestones, profitability, or hitting certain strategic objectives. When equity is tied to these measurable outcomes, it reassures the owner that the executives are focused on long-term value creation.
    2. Smaller, Performance-Based Grants
      Since the grants are smaller and the exercise price is higher than typical startup equity, we could structure things so that executives earn more equity as they hit certain performance targets. This means the company doesn't have to commit to large grants up front, but executives still have the potential for meaningful rewards based on their contributions to growth.
    3. Phantom or Synthetic Equity
      If the owner is worried about equity dilution, we could consider phantom or synthetic equity. This allows executives to benefit from the company's growth without issuing actual shares, so there's no dilution but still strong financial incentives tied to company performance.
    4. Highlight the Potential for Upside
      With the exercise price being higher, it's important to emphasize the long-term growth potential. We can clearly communicate to the executives how their equity could appreciate over time, especially as they contribute to the company's success. This way, the higher exercise price is seen as part of the upside opportunity rather than a drawback.
    5. Milestones for Additional Grants
      To keep things aligned with the owner's goals, we could create a plan where additional equity grants are tied to specific milestones that show real value growth. This makes it clear that equity will be earned over time as the company proves its growth, giving both the owner and executives a clear path forward.

    At the end of the day, equity is more than just compensation-it's about fostering a culture of ownership where everyone is aligned with the company's success. It encourages long-term thinking, motivates top talent, and helps retain leadership during critical growth phases. With the right plan in place, it can help drive the company forward and ensure that the executive team is fully invested in the company's future.

     




    Original Message


  • 4.  RE: Ask Me! Exciting Event Coming Up

    Posted 25 days ago

    This is a great scenario-and one we see more often than you'd think. The key here is building trust and setting clear expectations. For a successful, long-standing private company with a new exec team and a cautious founder, equity should be framed as a strategic tool to drive alignment and growth-not just a dilution risk. Starting small and tying awards to performance is key. Consider performance-based or milestone-driven structures that reward real value creation, and explore alternatives like phantom equity if ownership transfer is a sticking point. It's all about creating the right incentives while keeping the founder comfortable. Done right, equity becomes a powerful way to motivate leadership and retain top talent for the long haul.

     




    Original Message


  • 5.  RE: Ask Me! Exciting Event Coming Up

    Posted 29 days ago

    Do you have any recommendations on structuring incentives for sales roles, such as option grants tied to revenue targets, to motivate performance?



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    Olivia Stallings
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    Original Message


  • 6.  RE: Ask Me! Exciting Event Coming Up

    Posted 29 days ago

    I'm loving the questions that have come through so far-seriously, they're spot-on and super relevant. I'll be prioritizing these during the live session to make sure we're hitting what matters most to you. Keep them coming-I'm here to make this as useful and actionable as possible!



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    Robyn Shutak
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    Original Message


  • 7.  RE: Ask Me! Exciting Event Coming Up

    Posted 27 days ago

    Hi Olivia,

    Equity can work as part of sales compensation-you just have to be thoughtful about how you use it. Salespeople are used to short-term, performance-based rewards like commissions, so equity needs to feel just as motivating, even though it's tied to the long game.

    The key is to keep it simple and tied to real business outcomes-think revenue, not just activity. You can try things like performance-based vesting (e.g., a portion of the grant tied to hitting a milestone), bonus equity grants for stretch achievements, or annual equity tied to quota attainment. Some companies even layer in seasonal equity SPIFFs-small, fast-vesting grants that give newer reps a tangible intro to ownership. Flexibility helps too-if someone misses a goal one year but crushes it the next, maybe give them another shot. And don't forget: explain the equity. If reps don't understand what they have, it won't feel valuable. Be real about liquidity but keep the vision big. The goal is to help your best reps think like owners, not just closers-and the right equity approach can make that happen.

    Robyn



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    Robyn Shutak
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    Original Message


  • 8.  RE: Ask Me! Exciting Event Coming Up

    Posted 25 days ago
    Edited by Robyn Shutak 25 days ago

    Yes-tying equity to revenue targets for sales roles can work well, but it needs to be thoughtfully structured. Since equity is long-term and less tangible than commissions, the key is keeping it simple, aligned, and motivating. Start with clear, measurable goals-like performance-based vesting tied to revenue, annual quota-based grants, or equity SPIFFs as short-term incentives.

    For example:

    • Performance-based vesting
      Tie a portion of the grant to a specific revenue milestone-like 25% of the grant vesting once a rep closes $2M in revenue. The remaining equity vests over time as usual. This keeps reps focused on both short-term wins and long-term growth.

    • Bonus equity grants
      Think of these like equity SPIFFs or short-term incentives. For example, if a rep hits 150% of quota two years in a row, you could reward them with an additional grant. It's a great way to recognize and retain top performers.

    • Quota-based annual grants
      Build equity into the annual sales plan. If a rep hits their quota, they earn an equity grant. You can even tier the structure:

      • 90% to goal = partial grant

      • 100% = full grant

      • 125% = 1.5x grant

        Just make sure reps understand what they're getting and how it builds long-term value. Flexibility helps too-reward consistent performers and give second chances when it makes sense. Done right, equity can shift top sellers from thinking like closers to thinking like owners.



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    Robyn Shutak
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    Original Message


  • 9.  RE: Ask Me! Exciting Event Coming Up

    Posted 29 days ago

    Hi Robyn! Do you have any guidelines for option refreshes for cofounders after a Series A? Is that generally a milestone for a refresh?  



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    Isabella Trejo
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    Original Message


  • 10.  RE: Ask Me! Exciting Event Coming Up

    Posted 22 days ago

    Absolutely-Series A is a great time to consider a refresh grant for cofounders. By that point, you've likely been building for years, your original equity is mostly vested, and your role has evolved significantly. A refresh isn't about rewarding the past-it's about aligning incentives for the next chapter of growth. It's smart to frame the conversation with investors as a retention and alignment tool, not a bonus-and to bring it up proactively around the fundraise, while there's still room in the option pool. Done thoughtfully, it can be one of the most effective ways to keep key founders motivated through scaling and beyond.



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    Robyn Shutak
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    Original Message


  • 11.  RE: Ask Me! Exciting Event Coming Up

    Posted 29 days ago
    Edited by Mohammad Nour 29 days ago

    As an AI startup founder raising a $2M seed round, what interim team incentive structures would you recommend while we're still an LLC? Our advisor suggested waiting on C-Corp conversion until we have investors lined up, but we need alignment mechanisms that won't complicate our cap table. We've completed our 409A valuation and are actively reaching out to VCs.


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    Mohammad Nour
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    Original Message


  • 12.  RE: Ask Me! Exciting Event Coming Up

    Posted 22 days ago

    Great question-and one that comes up a lot. Most early-stage founders start out as an LLC because it's simple, flexible, and cheap to set up. But once you begin raising institutional capital-especially from VCs-you'll almost always need to convert to a Delaware C-Corp. Investors typically won't invest in an LLC because it doesn't support preferred stock, board structures, or the legal protections they expect. The best time to convert is after you've had some serious investor conversations and a term sheet feels likely-but before you sign anything or close a deal. Converting too early can cost time and money, especially if your plans shift. And waiting too long can slow down the fundraising process. During pitches, it's totally fine to say: "We're currently an LLC but plan to convert as part of this round." Just make sure you have a good startup attorney to help with the transition and avoid any legal or tax hiccups.



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    Robyn Shutak
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    Original Message


  • 13.  RE: Ask Me! Exciting Event Coming Up

    This message was posted by a user wishing to remain anonymous
    Posted 28 days ago
    This message was posted by a user wishing to remain anonymous

    Hi Robyn,

    We are a US private company with 2000+ employees/business partners. We are looking for the best practices for our equity strategies and we appreciate your time and expertise. 

    Question: Do private companies often provide their employees options to purchase common stock with limited rights (i.e. no voting and dividend rights) or do they offer options that contain the same rights as the founders?     


    Original Message


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