The data says in some cases yes, but mostly no.
In a survey on our website, we don’t see a decisive split on how much of their equity organizations set aside for these programs by business type, though there are some differences.
For all organization types, the plan most often sets aside 5%-10% of equity for their program:
• LLCs were most likely to set aside a 5% pool for the program (35% of all LLC respondents), but the 10% level was not too far behind as reported by 32% of respondents.
• For S Corporations, just under half (46%) of respondents reported a plan to share 10% of company equity with employees.
• And the C Corporations were almost evenly divided between sharing at 5% and 10% of equity.
• Of the respondents in other organization types, non-profit, individual and sole proprietors, they also mostly report 5% or 10% pools, though one large non-profit came in at 25%.
At the other end, the organizations intending to set aside 25% of their equity in a pool for employees was most likely C Corp, closely followed by S Corporations. But only about 10% of both types were planning to set aside that much.
So, what is the takeaway for organizations of all types?
With most organizations setting aside 10% or less for their equity program, there is an opportunity to stand out from the competition by allocating more of your stock to the program. However, don’t feel pressured into offering more if it will be a burden. You’re in good company at 5%-10%.
