Since I posted a thread titled "Incentive Structure For Sweat Equity
Positions" about 20 months ago, I have been involved in a variety of
aspects of the business, a frustrating experience at times, but was
very rewarding in the end. There is also some developing interest on
the equity front. More im****tantly, there is also an emergence of key
platforms where our products can be deployed. It looks like as many
ducks as possible are in a row, of course within reason, and I felt
that it is time to make an effort to move forward.
Parties who I can partner with would ideally be someone who is trust
worthy, has a financial stake in the business, and can also provide
sweat equity. However, as we have discussed in the old thread, in
reality it would be quite difficult to find someone who meets all of
the above. A compromise might be to offer a "stock option" if that's
the right term, an option to buy stock at a more favorable price. I
am sure there are a lot of other details that I have missed, but
here's the simplified version.
Out of the 100% total equity, 5% will be used to raise the initial
capital. The company would be organized into strategic, management
and operational units. I think I can lead the strategic unit, and
find two other individuals to lead the management and operational
units, mainly on a sweat equity basis.
The strategic unit will provide vision and leader****p, which would
have 5% of the stock designated for, given out over a five-year
period.
The management unit will handle investor relations, accounting,
database management, server management and promotions, which would
have 5% of the stock designated for, given out over a five-year
period.
The operational unit will handle development, tech sup****t and sales,
which would have 10% of the stock designated for, given out over a
five-year period.
The leaders of each unit will handle the stock allotment to those that
are recruited further down the line in their own units. This only
applies to those recruited on a sweat equity basis, but not to those
on a cash only basis. To encourage financial participation of the
parties involved, each organizational unit will be allowed to purchase
additional stock up to their maximum designated amounts at a favorable
price, for example, half of the current price.
The purchase of stock at favorable prices will be subject to approval
by the management, and will have an expiration time line set to it,
for example, at the end of each year.
Under this scenario, by the end of five years, if all units exercise
their "stock options" to the fullest extent, I will still own 55% of
the total equity, which still is a controlling interest I think.
Am I on the right track, or did I miss anything? I would love to hear
your thoughts.
Thank you in advance!
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