What are some wealth-management issues and strategies for executives at early-stage companies?
Corporate executives employed by privately held start-up companies face complex wealth management challenges. Like their peers employed by publicly traded companies, executives at early-stage companies typically receive compensation packages that include a mix of salary, bonus, and equity-based compensation. Yet, while salary and bonus levels at pre-IPO companies need to be competitive enough to attract talent, there is often less room to negotiate cash compensation. An executive should focus the negotiations, then, around matters such as the magnitude and types of stock option grants (e.g., incentive stock options versus non-qualified stock options).