An old associate is bringing me on-board his start-up company to assist him with his marketing practices. His company manufacturers a new product; this began as a side project. My role within the company would be to run the marketing and sales; he has approved the option of my compensation as equity in the company since income is unavailable at this point.
My question is, how much equity am I entitled to for taking a Marketing Director or Vice President’s role within his organization? It is my belief that I would be one of only two or three working on this project and I could possibly be doing more work than the founder/president.
Thank you for your help.
I understand that I am not "entitled" to a specific amount of equity; I am trying to determine what would be an adequate business arrangement since I am unable to invest funds into the company and the company is unable to provide an income at this time. The founder/president has invented the product and has only built a website; I would be providing majority of the marketing and sales support while the company grows. The product is designed for commercial and residential use; commercially it would be sold through suppliers and residentially it would be sold through retail stores. It is sold for under $7 and it would be used in the service industry and/or ease-of-use marketing. Unfortunately I cannot divulge any more information at this time.
Employment / Labor Attorney
You not entitled to any amount. It is a matter of leverage and how much they want you. My advice is to make sure you reach an understanding in writing as to how you will be paid and how much work you will be reqired to provide before you take the position. You need to know who else will have equity shares and what they are expected to contributed. I just don't know enough about the company to provide you any more advice
While you are not entitled to any equity in the company as a matter of law, and the amount of stock that you receive is a matter to be negotiated between you and your associate, there are other matters to consider. In addition to a written agreement regarding how you will accrue stock to compensate for your efforts, you and your associate should write a carefully constructed agreement that lays out your obligations to each other on a day-to-day business. The most prudent course of action for you would be to consult a competent attorney to represent you alone in these negotiations. Do not attempt to have one attorney represent both you and your associate.
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Lawsuit / Dispute Attorney
As agreed, you are not entitled to anything. What compensation you get is a matter of negotiation between you and the company. What you will be doing for the company, time commitments, risk, the benefit of your efforts, and much more are all factors. This is not really the place to get good advice on what and how to negotiate. You should locate an attorney or consultant familiar with the market, the job, etc. that can help you determine some benchmarks and to whom you can reveal more details on a confidential nature.
DISCLAIMER: This answer is provided in response to a "hypothetical" question and provided for general, informational purposes and does not create an attorney/client relationship. The information presented is not legal advice and may change based additional information and research. It is recommended that you speak to an attorney to discuss your specific legal issues.