Private Companies Weigh Employee Stock Options - 13 March 2010

http://article.trdunya.com/private-companies-weigh-employee-stock-options.html

Q: I understand that Entrex has brought public market standards and
disciplines to the private market. What does this mean for my employees
and the possibility of stock ownership or options?

- Al Davenport, business owner, Pompano Beach, Fla.

A: This is a great opportunity to show your employees the value they
bring to your company. Just imagine if employees could actually see
quantifiable gains and losses in the value of the company through their
efforts.

Public companies have the advantage of being able to option employees
with shares that have quantifiable value. Now, by following the
standards for public company disclosures and reporting, private
companies and their shareholders can measure performance against
established benchmarks.

As a company owner, you have the choice of providing limited
distribution of company data or offering wide access to the community of
alternative investors. In either case, by participating in the private
company market, you provide employees the means of having a tangible
quarterly valuation of their stock and ultimately, the possibility of
liquidating their shares.

You didn’t mention whether you have an actual employee stock
ownership plan program, or if you have limited distribution of stock to
key employees. While ESOPs may provide liquidity for the founding
shareholder, new owner/employees have generally fewer liquidity options,
because they have limited exposure to the financial community.

The private equity market provides a vehicle for companies to gain
exposure, allowing their stock to trade freely among alternative
investors. By simply following industry-accepted valuation principles,
owners, optioned employees and external investors can acquire shares,
track share value and know their liquidity options.