How to use an ownership vesting schedule to align interests
Business owners often will ask me how they can give five or 10% of their company to a very loyal employee. And the problem is once you sign the paperwork, if you give away 10%, or any percentage of your company, that employee doesn’t have to work anymore, they can disappear and keep their 10% of the company and cash in months or years later. So a smarter way to do that is to have a vesting schedule where the employee may get one or 2% Every year over a period of time to ensure that they have to continue working in order to truly be vested in that percentage ownership. It’s a very smart way to do it. If you don’t want to lose a percentage of your company and get nothing in return.
