“Sweat Equity” in Startups and Early-Stage Businesses (2015)

4.0 Credits: 2.0 Skills, 2.0 Areas of Professional Practice

Because early-stage companies often cannot afford to pay their workers in cash, a significant part of their workers’ compensation will consist of founders’ shares, restricted stock, options, warrants and other “equity” securities. Workers whose only compensation consists of stock or other securities are referred to as “sweat equity.” 
If a company takes off and becomes wildly successful, “sweat equity” workers who sign up early can share in the exponential growth in the company’s value. But if the “sweat equity” compensation plan is not structured properly, both the company and its workers may face legal and tax consequences that may jeopardize the startup’s success. 

This program focuses on the often complicated legal, tax, financial and ethical issues involved in compensating “sweat equity” participants in early-stage companies, including (in some cases) the company’s founders. 

Program Topics

Introduction to Sweat Equity

Compensation Issues for the Startup Venture

Tax Issues for the Startup Venture

Employment Law Issues for the Startup Venture: Representing the “Sweat Equity” Worker in a Startup or Early-Stage Venture

Panel Discussion of Mock Letter of Intent

Program Chair

Cliff Ennico, Esq., Law Offices of Clifford R. Ennico, Fairfield, Connecticut

Faculty

Wendi Lazar, Esq., Outten and Golden LLP, New York City

Leo Parmegiani, CPA and Tax Partner, O’Connor Davies LLP, New York City

 Thomas Riggs, Esq., O’Connor Davies LLP, New York City

Total Credits: 4.00 | Skills: 2.00, Areas of Professional Practice: 2.00