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What to Consider Before Offering Employees Stock Options

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With the letters "IPO" occurring with greater frequency in headlines as it pertains to companies like Groupon and Facebook, it might be tempting if you run a tech company to consider offering stocks to your employees. After all, it's a laudable way to spread around the wealth while both rewarding and encouraging the talent that helped build your impending success.

But there's a few things to consider before you start raking the cash all around. Jeff Kuhn, of CFO consulting firm FLG Partners, recently addressed an audience of start-up CFOs, CEOs, and other movers and shakers about some things to consider first. More specifically, they're potential problem areas to avoid if at all possible.

"If you're going to participate in these markets, the safe bet is to act like a public company," the Wall Street Journal quoted Kuhn as saying. "The safe bet means perhaps board-imposed trading windows inside the company, disclosure, vetting all kinds of stuff." If you'll recall, Facebook fired a senior employee for insider trading earlier this year. If it can happen there, it can happen anywhere, so a little precaution will save you some major headaches.

Also among the tips Kuhn shared are to be as transparent as possible -- sharing the same information with everyone -- and, if you eventually go public, to get to know your outside investors as well as your shares-holding employees.

Read the full report of Kuhn's talk over at the Wall Street Journal.

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