conversation: User (I-Code-Things): "My current employer is a startup LLC.  It's about 3 years old and we only have a few employees but are expanding.\n\nI've been working my ass off since I started just over a year ago.  50-70 hour weeks consistently.  I redesigned / rewrote our entire product from scratch basically alone.  (humble brag but it helps support coming info).\n\nWhen I started we had no clients or real prospects, now we have 3-5 clients that are in the process of signing documents and will be using the product within 2-3 months.  Basically it's crucial we finish up a few features and make sure everything is bug free.\n\nWell a couple months ago Google called me up and flew me out to Mountain View for an interview.  I told the CEO about it a month before I went down.  He freaked out because they really can't loose me.  He said he'd try to offer me part ownership of the company to stay even if I don't get the job.\n\nDidn't get the job at Google.  Now that it's crunch time I need to take on a lot more responsibilities.  At least until we expand to almost 300% of the company.  It means a lot more work than what I'm already doing.\n\nThe CEO talked to his lawyers to figure out how to get me partial ownership.  They said they'll give me something called "Equity Appreciation Rights".  5% vested over 4 years.  They said it is similar to stock options but for LLCs and that I won't have to pay taxes on it.\n\nI have never heard of Equity Appreciation Rights, what the rules of them are, the pros/cons, etc.  Can anyone give me any info about what to expect?  Is there any red flags I should watch out for, if 5% is anything to write home about, etc.  This is a lot more responsibility and I need to know if it is worth my extra effort.\n\nThanks in advance for any help!"
  Self: "I work pretty extensively with private equity-backed companies - I'm in an accounting firm, but my job is to review agreements like this for stock comp purposes.  I've been doing this for maybe only 5 years, but I've read hundreds of these agreements, so I know enough to be dangerous. \n\nYou'll want to know how your units fit into the company.  It's easy to give real stock comp, and it's easy to give crap.  It's all about the wording.\n\nYou're going to want to see the operating agreement of the company you're working for, and read how the profit interests fit into the picture.  You'll also want to read the actual grant agreement.  You'll also want to know how much else is outstanding - if you have a billion dollar business, but you only own 0.0000001% of it, that's nothing.  Lastly - figuring out how easy it is to screw you out of your interest.  If it's possible for them to issue more units without compensating you, that's bad. \n\nThose are general thoughts.  Definitely get an adviser on this subject. "
  MrCakePie (MrCakePie): "Isn't it illegal to issue more units without compensating original option holders?"
  Nurum (Nurum): "They may have the right to issue future units. So if you get 5 or the original 100 units, but they have the right to issue a billion more later you're screwed."
  