EMPLOYEE OWNERSHIP AND OPTIONS
Another area of concern, particularly in small businesses, is the handling of employee option plans. Start-up businesses tend to hand out options easily as a means of attracting top talent. As the business grows and the staff changes, these businesses are notorious for losing track of what options they have issued or promised. The result is a potential for stock dilution to occur without being accurately tracked. As an investor, you will require a clear statement of outstanding ownership. There is a risk that some key employees will become disenfranchised if they find the verbal agreements they thought they had have not been identified.
The question of ownership goes to the spirit and culture of many businesses ...
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