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I am working on a web startup and I was wondering how vested stake works in the context of an L.L.C.

The founder team would like to add a founding member to the L.L.C. with the only compensation being vested stake. However it's been difficult finding information regarding this and the appropriate legal documentation.

Hope someone here can provide more clarity on this. Thanks!

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This is why people don't use LLCs in that situation, and use C corp instead, which have well-known terms for vesting of stocks. – Alain Raynaud Oct 15 '11 at 7:39

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As @Alain mentioned, LLC's are a poor model for vesting simply because LLC's have percent ownership and no stock.

It's best to use a C-Corp. I would be a little wary if someone is offering to vest shares in an LLC. The only way to do that would be for the present owner to give up a percent of the company based on some agreement between the two of you.

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While I agree that the task is easier to accomplish with a corporation because many applicable corporate form documents already exist, it is not correct to say that LLCs (only) have percentage ownership. LLCs can be formed, alternatively, with unit ownership, where LLC units are the equivalent of corporate shares of stock. Use of units is especially appropriate where there are multiple classes of unit-holders (typically with different classes having different economic or voting rights). – Dana Shultz Oct 16 '11 at 18:39
@DanaShultz. Thanks for the clarification. My experience has only been percent ownership. – Jarie Bolander Oct 16 '11 at 20:43

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