CRASH COURSE Offering equity to your employees Crash Course | An entrepreneur’s guide to employee equity 1Table of contents Intro 04 Get ready for takeoff Part 1 06–07 Why equity matters Part 2 08–14 Key terminology Part 3 15–25 Building your equity strategy Part 4 26–29 Lessons from entrepreneurial test pilots Part 5 30–31 Communicating the equity package: What your employees need to know Part 6 32–40 Tax time: a basic guide for your employees Crash Course | Offering equity to your employees 2A foreword from our CEO When Eddie, Tomer, and I first started Gusto, we discovered something special: responsibility is exhilarating. Being owners gave us courage and a long-term mindset that suddenly brought things within reach. We realized that while company founders are owners, more importantly, so is the team. Igniting a true sense of ownership — the type that rallies the whole team around a single mission — starts with one’s equity stake in the company. Every person that joins your company sets the foundation for the future, especially in a growth environment where change is the one constant. Clearly articulating your values through your job offer helps you find alignment with those who already possess the ownership mindset that you seek. And to truly empower your team, it’s important that you give them the information they need to understand the upside of what they’re building. The thing is, getting equity right is really, really hard. As devout believers in the power of ownership mentality, we decided to provide founders like you the insights you need to build amazing teams and get equity right from day one. And while the goal isn’t an exit or an IPO, we think it’s critical for your team to be invested in the journey ahead. We hope that this toolkit will also help you question common assumptions