Compensation within a Startup - Cash and Equity

The video explains compensation strategies in early-stage business ventures, focusing on cash and equity compensation. It highlights that owners typically receive profit distributions rather than salaries until the business becomes a corporation. Startups often pay below market rates, using funds for growth, while offering equity or stock options to key talent. Alternative methods like profit shares and phantom shares are discussed, emphasizing their role in attracting and retaining employees despite financial constraints.

What is the difference between restricted shares and stock options in terms of employee compensation?

What challenges do startup companies face regarding profitability and employee compensation?

How do phantom shares function in relation to actual shares in a company?