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Though stock-for-work is a less popular pay alternative these days, it still may be the only way that you can attract the level and quality of employees you need in your startup business. The Sarbanes-Oxley rules changed the way that deferred compensation can be used. This means that you need to talk with your attorney and know how you can trade stock for work. Among the issues that you likely will have to address are: correct corporate structure; employee qualification for deferred compensation; and development of the proper paperwork.
Be legally prepared to offer stock for compensation before you talk to potential employees about deferred compensation. When you are ready to make that offer, know what the parameters of the exchange are. Know if you will be granting stock for showing up to work, or only when specific outcomes are achieved in order for the stock to be granted.
Attorneys who work with early-stage companies understand the issues. If your attorney says that you can’t trade stock for work, find out why. Your attorney should know your venture well enough to guide you in the right direction.
Marilyn Holt, Certified Management Consultant
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