Stock options are super-complicated, there are many gotchas, and there can be serious tax implications. Like having to pay taxes on &quot;profits&quot; from exercising options before having the revenue from selling them, which may prevent options from being exercised. I think all these drawbacks often make stock options have near zero value in the eyes of employees. Which makes it not that fit for purpose, which is supposedly to motivate your employees and align their interests with those of the company.<p>Is there a better way? If you run a startup and you want to achieve the same ends of providing a form of compensation that&#x27;s tied to the future success of the company, but doesn&#x27;t involve immediate outlay of funds, how would you structure it? It should be as simple and straightforward as possible with a minimum of gotchas, and avoid tax implications as much as possible. I&#x27;m kind of surprised YCombinator hasn&#x27;t innovated anything in this space, like they did with &quot;the Safe&quot;[1].<p>What about something along the lines of making a pool of X% of the gross revenue of the company each year, and dividing that among all the creative employees fairly, and adjusted by how many months of the year the employee was at the company. Then just paying that out every year as the end of year bonus.<p>[1] <a href="https:&#x2F;&#x2F;blog.ycombinator.com&#x2F;announcing-the-safe-a-replacement-for-convertible-notes" rel="nofollow">https:&#x2F;&#x2F;blog.ycombinator.com&#x2F;announcing-the-safe-a-replaceme...</a>