In recent years, it has become more and more common for technology and other startups to attract and compensate their employees through grants of stock and stock options. In Silicon Valley, stock options have become an expected element of compensation. For startups competing with more established companies for talent, stock and stock option grants have become an effectively mandatory element of compensation.
The ubiquity of stock options masks their underlying legal complexity. Employers need to ensure that their equity compensation programs comply with applicable law, including federal and state securities laws, or risk substantial fines and other penalties. For example, Credit Karma was fined $160,000 by the SEC for failure to comply with the federal securities laws.
Federal and State Securities Laws