I Was Offered Ownership







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I Was Offered Ownership in the Company But There is Nothing in Writing – What Can I Do?

by BRYAN GIANESIN on JUNE 4, 2012

Gianesin Law Firm- Bryan Gianesin, Business Attorney- June, 2012

“Get Your Employment Understanding in Writing”

Irvine Business Attorney Helps With Sales and Other Management Level Employees

“I Was Offered Ownership in the Company But There is Nothing in Writing -What Can I Do?”

Recently, a friend and business colleague of mine told me that he had resigned from his job with an Irvine, California based tech company after spending over a year working there. The resignation was prompted by a disagreement between my colleague “Bob” and the owner about discussions and agreements they had about Bob sharing in the rewards of his success at the company.  In truth, both parties lost out. The company lost a potentially valuable human asset and Bob lost an opportunity to help grow a company.

Although I represent many companies, periodically I have the opportunity to advise high level sales executives and others who are negotiating with the owner of a company to hire them and who promises “if all goes well” that the employee will get a piece of the revenues or an ownership interest in the company. I had hoped to have Bob say that he needed an Irvine business attorney to represent him in a breach of contract action against the business owner, but Bob had no written agreement with the owner. Oral agreements of this kind are nearly impossible to prove without written substantiation or witnesses to the agreement, so Bob is essentially out of luck.

Bob’s problem is that he failed to get the owner to commit in writing to a serious plan to reward Bob.  I’ve lost count at the number of times I’ve heard about these “empty promises” and that the employee failed to have a qualified business attorney, like the Gianesin Law Firm, Bryan Gianesin, prepare such a document for him/her.

I frequently counsel company owners to seriously consider using this type of incentive agreement if they believe that the new senior employee is highly qualified and motivated to succeed. It is not necessary to give company ownership to create “incentive”. Most high level employees are satisfied with monetary compensation (often since a privately held company interest will have no inherent or immediate value to them).

It is not difficult to create such an agreement that will satisfy both parties and allow them to part ways if specific goals are not reached. If you are an employer or an employee in Irvine, California or Orange County, California who has an opportunity to create this type of arrangement, you should contact the Gianesin Law Firm, Bryan Gianesin Business Attorney to assist you. It really can work for both parties. Contact us at (949) 354-5520 or e-mail us at bryan@gianesinlaw.com for a complimentary  consultation.