Legal Question in Business Law in California

Assume there are no shares included in the offer (employers always seem to find a way to not give them). I assume you have already asked them in writing (not verbally) for clarification re: the precise number of shares and the date on which your ownership would become vested.

If it is incorporated in Delaware, maybe you should address our Delaware attorneys. In any event, Mr. Stone's approach is pretty wise - the company can dilute incredibly, and Preferred B shares are not Preferred A shares, and on and on. If you are a hot property and the corporation really, really needs you, it will explain everything in detail (and the explanation would still be subject to some reservations). If you are just getting "preferred stock," consider it just as valuable as your choice of office wallpaper unless and until it is explained in full detail.

It is not unreasonable for you to request the total number of preferred shares outstanding, as well as the "Statement of Designation" which provides for the rights of the preferred shares. Stanford received preferred shares in Google in exchange for a license of their search engine, and has done quite well because of it.

There are risks involved, and without knowing the rights of the preferred shares, you can't properly evaluate those risks. If they are unwilling to give you that information, that should raise a red flag, and you should be cautious.