The Venture Alley - A blog about business and legal issues important to entrepreneurs, startups, venture capitalists and angel investors.

CONTRIBUTED BYTrent Dykestrent.dykes@dlapiper.com A reminder to companies that had incentive stock option exercises in 2012, Section 6039 of the Internal Revenue Code requires a corporation to furnish a written statement to any employee or former employee who either exercised an incentive stock option during 2012 or during 2012 first transferred legal title to shares acquired under the corporation's Section 423 employee stock purchase plan. The corporation must furnish these statements on Forms 3921 and 3922 no later than January 31, 2013. These corporation must also file information returns providing the same information with the IRS. This requirement applies to both privately... More

CONTRIBUTED BYTrent Dykestrent.dykes@dlapiper.com As a general rule, all stock option grants need to have an exercise price at or above the fair market value of the company’s common stock on the date such grant is made. This requirement, and its many related complexities, generally comes from Section 409A of the Internal Revenue Code and the related Internal Revenue Service (“IRS”) regulations (collectively, “Section 409A”). Section 409A was enacted several years ago in response to perceived abuse of deferred compensation arrangements brought to light during various high-profile corporate scandals. The two main penalties imposed by Section 409A for granting a stock option... More

Courtesy of our colleagues Dean Fealk, Jordan Watson, Luigi Falivene and Graham Roe "Extending US Employee Stock Plans to UK Employees: What you Need to Know", published by our Global Equity Compensation group, covers some of the key issues to consider when planning to issue options to UK employees from a US equity plan.... More

CONTRIBUTED BYMegan Muirmegan.muir@dlapiper.com   NY venture capitalist Fred Wilson has an interesting blog post about various approaches to employee equity being considered by some of his fund's portfolio companies. For now, he comes out in favor of granting stock options instead of restricted stock or other forms of equity. The last few lines reveal some of his investing approach:... More