Stock-Based Compensation: What every founder should know
Stock-Based Compensation (SBC) is a strategic method used by companies to reward and incentivize employees by offering them a stake in the business. This compensation can take various forms, such as stock options, restricted stock units, or performance shares. Beyond just being a motivational tool, SBC plays a significant role when it comes to selling a business. It impacts employee retention, company valuation, and equity structure—key factors that potential buyers closely examine during an acquisition. Properly managing and understanding SBC is crucial for aligning interests, motivating key talent, and preparing for a smooth transaction.
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