“Equity compensation is a subject that captures the attention of private equity and venture capital investors and company management alike. For many years, the rules and standard techniques used to grant equity compensation were relatively static.
More recently, however, changes in the tax, accounting and securities laws and development of new techniques have led to new approaches. Some of the changes, such as the requirement to expense options, have been well publicized. Other changes are less obvious, and present both opportunities and pitfalls for the unwary.”
This article from Goodwin Procter LLP (via Mondaq) summarizes the changing landscape, offering useful suggestions for maximizing the incentive potential and tax benefits of startup equity compensation.