Some companies have good, formal stock option plans with properly priced options set to reward all in the event of a corporate sale. Usually, the higher the ranks, the more the options held and therefore the greater reward at exit. If there has never been outside investors to organize such an option program, many CEOs never get around to creating a system for rewarding employees in a sale.
I found myself in such a situation upon a sale of my computer software company. There was no question that each of the five vice presidents had been greatly responsible for our success and getting us to the successful exit. Yet there was no formal reward in place other than the employee stock ownership program (ESOP) which was set to pay all employees for their accumulated shares at the exit. So I wrote into the final distribution instructions a surprise five figure bonus for each of the five executives. Each was surprised, pleased and effusive. Upon reflection, I should have given each even more.
