This week's video discusses potential pitfalls with granting employees stock or stock options.

Emerging companies often want or need to pay an employee is stock or stock options.  When there's little cash to pay an employee her true market value, the possibility of significant gain from being an owner can bring high quality employees to the team.

Of course, there are issues that need to be addressed in order to avoid a couple of legal landmines.  Done incorrectly, there can be big negative tax consequences for both the employee and the company.  Also, you've got to be sure that the company will get the full benefit of granting the stock.  Often, once the stock grant is made the employee doesn't follow through or turns out not to be capable. You've got to be able to buy back the stock if the employee is terminated for cause or quits.

Enjoy.