Legal Question in Securities Law in New York

Re: is paying employees with stock options instead of a salery legal?

This question is somewhat complex and is highly dependent on the circumstances. For example, are they proposing to substitute ALL of your salary for stock options or just a part? In general, paying employees with stock options as part compensation is legal. The only exception might be if, as a result of this arrangement your compensation did not meet minimum wage requirements. The fact that they are doing this to inflate earnings is also not much of an issue because they are not ARTIFICIALLY inflating earnings -- their earnings would legitimately go up if they paid you less (unless they expense stock options, which would make their earnings analysis more complicated).

Your question, which is probably better directed to the employment law board, should probably be whether you can do anything to prevent them, in your particular circumstances, from forcing you to take stock options in lieu of salary. I suggest you consult an employment lawyer in this regard.

Best of Luck.

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WARNING: This information is not intended to constitute legal advice and should not be relied upon for any purpose in lieu of consultation with appropriate legal counsel in your own jurisdiction.

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