I've been that key employee that was instrumental in growing a family business only to hear the "dangling carrot" about stock options one too many times. There's a better way 👇
Most employees embrace a company's culture. That's the #1 way to attract and retain employees. If it's not there today, build it.
If you have a high performer, eventually they'll want more than just a salary, bonus, and token merit increase.
I'm also very stingy on equity. I advise clients to avoid using equity/stock options as retention tools in private businesses.
Consider the following approaches:
- Profit sharing into company account with generous vesting
- Phantom options - not as hard as you may think
- Non-monetary gifts (i.e. trips, adventures)
It doesn't have to be complicated to retain without equity.
Do it before they leave, not regrets afterwards.