How to Allocate Stock (Keeping Everyone Happy is Another Issue) Presented by: Dee DiPietro President Advanced HR, Inc. 408-872-0377 www.advanced-hr.com

1/27/99

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Table of Contents

How to Allocate Stock (Keeping Everyone Happy is Another Issue) Presented by: Dee DiPietro President Advanced HR, Inc. 408-872-0377 www.advanced-hr.com

Theory of Company Development

Pay Packages Change with Increasing Company Value

An Overview of Pre-IPO Compensation 

Some Common Events that Affect Company Value 

Determination of Company Value 

Relationship Between Revenue, Value and Stock 

The Role Options Play in Pre-IPO Pay 

Know Your BOD’s Expectations 

Creating an Effective Stock Option Plan 

Creating an Effective Stock Option Plan 

Pay Profiles Have Changed Dramatically Due to Labor Demands

Equity Demands by Senior Hires are Not Proportional to Increasing Company Value 

What Will Happen to Our Current Ownership Expectations? 

Where is Extra Ownership for Critical Hires Coming From? 

What is the Solution?