How to Divide Stock Fairly Among Founders

With all the talk of Groupon's stock and how it's doing -- which is not well, at the moment -- it's fair to say a lot of folks in the business world have stocks on the brain. That makes this recent post over at FindLaw particularly timely. Essentially, the post discourages entrepreneurs from assuming stocks should be divvied up evenly.

It might hurt some feelings now to assert that not everyone is an equal part of a success, but it's better to have some hurt feelings now than nasty litigation later.

Basically, you should all sit down, the post says, and discuss whose idea this particular venture was originally ("simply coming up with the idea shouldn't give majority ownership to the founder… a patented idea carries more tangible weight than an abstract idea") and whose projections include being vested in the project for the long haul (if they're going to peace out sooner, they're clearly less committed to this particular endeavor).

Speaking of vesting, an important one is to have vesting restrictions. "Your stock agreements should have provisions stating that no founder can pull out stock in the company until the lapse of a certain period of time," writes author Maryam Ansari. "The last thing you want is for someone to put in the minimal and cash out early at the same proportion as the founders who are toiling away daily."

She also points out that not everyone needs to be an owner. Or as Oscar from some NBC show called The Office said: "Look it doesn't take a genius to know that every organization thrives when it has two leaders… Where would Catholicism be without the popes?"

Read the full post over at FindLaw.

David Wolinsky is a freelance writer and a lifelong Chicagoan. In addition to currently serving as an interviewer-writer for Adult Swim, he's also a columnist for EGM. He was the Chicago city editor for The Onion A.V. Club where he provided in-depth daily coverage of this city's bustling arts/entertainment scene for half a decade. When not playing video games for work he's thinking of dashing out to Chicago Diner, Pizano's, or Yummy Yummy. His first career aspirations were to be a game-show host.

Contact Us