Carta Collective

Hey @Alan DeRossett! Typically you'll issue one of two types of option grants - either Incentive Stock Options (ISOs) or Non-qualified Stock Options (NSOs). ISOs can only be issued to U.S. employees (W2 employees), and NSOs can be issued to non-US employees, other service providers, board members, etc. The tricky thing is that NSOs are usually issued to service providers of some type, and they usually contain a vesting schedule so that the service provider can earn the shares as they provide services to the company, and then in Carta you 'terminate' them when they no longer provide services, so that the post-termination exercise period then kicks into effect.

I have seen a company who had 'advisors' to whom they issued NSOs, and then they just never terminated them, though I don't recommend that. There are some other types of equity that may be issued, though I'm not sure they would be very useful in Carta since they don't track phantom equity or non-options/RSUs that well. I'd definitely recommend consulting with legal counsel about this if the equity is a sort-of prize.

@Teresa-Judith Chartrand do you have thoughts on this?

Thanks for tagging me, Chris!

Chris is correct re: the two types of awards (ISO and NSO), and if anything, these would be NSOs.  However, given this context, this type of 'award' doesn't appear to be under the umbrella of stock options.  If this is to share in prize money (i.e., the volunteers are providing their volunteer services and in exchange will receive a portion of the winnings from a competition, if any), then you'd have a side agreement entirely unrelated to a stock option plan (unrelated to stock entirely, it sounds).

I might be misunderstanding the mechanics of your process/end goal - perhaps more context would help.

Thank you, @Teresa-Judith Chartrand

Yes, the Team volunteers all currently have an XPRIZE team agreement with Angel Sharks and I wanted to also reward the team with our Stock Appreciation in future rounds as past this XPRIZE we have ongoing business revenues in Carbon removal businesses.  Some team members may become future employees and be offered separate ISO at that time, so we are using this to treat all equally. @Teresa-Judith Chartrand

@Alan DeRossett If you are looking at true SARs, then I would have to say this is where you'd want to get counsel and/or tax professionals involved, or anyone who has specific experience with SARs (and I'm sure Carta can provide you with some direction).

SARs are definitely out of my wheelhouse, and our firm does not work with them.  Or, more accurately, none of our clients do (their equity plans typically exclude SARs as a reward type) - once you move from stock compensation to cash compensation via SARs it's a different world (for us).