Golden Handcuffs: How to Reward Key Employees Without Giving Up Equity

As your small business expands past your first few million dollars in top-line revenue, you realize that your company cannot grow further without high-performing executive leadership. You recruit a stellar Chief Operating Officer, a veteran VP of Sales, or a brilliant technical director who stabilizes daily operations and drives profitability. Soon after, the retention conversation begins. Your top manager asks for an equity stake in the company, or you voluntarily consider granting them five or ten percent voting stock to keep them committed for the long haul. Giving away corporate equity to retain non-founder key employees is one of the most dangerous mistakes a business owner can make.