Equity Compensation Agreements Under Michigan Law: What a $3 Million Verdict Teaches Business Owners

A recent Michigan Court of Appeals decision is a reminder that vague promises about equity, no matter how well-intentioned, can become a multi-million dollar liability. In Yusuf A. Hai v CIG Capital Advisors, Inc., a published opinion decided June 18, 2026, the Court of Appeals affirmed a jury verdict awarding a former executive $3 million after his employer denied him the equity stake he claimed to have earned over more than a decade of service. For Michigan business owners who use equity, profit interests, or “sweat equity” to attract and retain talent, the case is a useful case study in what can go wrong — and how to avoid it.

What Happened in the Case

CIG Capital Advisors, a wealth-management company, brought on Yusuf Hai first as an independent contractor and then under a negotiated employment agreement. That agreement promised him a 10% equity interest in the company’s consulting division, vesting in annual increments, conditioned on “revenue hurdle rates” that were to be “established on an annual basis.” The agreement itself never defined what those hurdle rates actually were — it left them to be set later.

What the parties said about those hurdle rates afterward became the heart of the trial. Hai testified that the company’s founder repeatedly told him at annual performance reviews that he had earned his equity — and that the two later orally agreed he would keep accruing equity each year, eventually approaching a 50% stake in the division. His written performance reviews praised his revenue results and never mentioned a missed hurdle rate. The company even created an internal spreadsheet showing his ownership stake growing year by year, though it later characterized that spreadsheet as a hypothetical model. The founder denied ever telling Hai he had earned equity, and the company maintained he had no equity interest at all. After a falling-out over how revenue from a large overseas consulting project was being allocated, CIG terminated Hai’s employment, and he sued for breach of contract.

At trial, a jury sided with Hai. He had sought nearly $6 million in damages, supported in part by a third-party valuation of the company at $12.8 million and testimony about his division’s share of that value; the jury awarded $3 million. CIG appealed on several grounds, including that Hai should have been limited to equitable relief (an actual ownership stake) rather than money damages, that certain damages testimony was improperly admitted, and that the verdict was against the great weight of the evidence. The Court of Appeals affirmed the verdict in full — rejecting some arguments on the merits and declining to reach others because CIG had not properly objected at trial.

Why This Matters for Michigan Businesses

The case turned on ambiguity. Because the written employment agreement never defined “revenue hurdle rate,” the parties were left to argue about what was actually said in performance reviews and informal conversations years after the fact. The court also allowed the jury to consider whether the company’s conduct amounted to fraudulent concealment, which tolled the statute of limitations well beyond what CIG expected — the underlying claim dated to 2011, and the lawsuit was not filed until 2022. In other words, undocumented, informal communications about equity did not just create a dispute — they created a legal theory that kept an old claim alive.

This is a recurring theme in Michigan equity compensation disputes: courts will look past the label “equity” and let a jury weigh whatever the parties’ actual course of dealing suggests, even when that course of dealing was never reduced to writing.

Practical Takeaways for Business Owners

Define every metric in writing

If equity vests based on a “hurdle rate,” a performance target, or any other condition, put the specific number and calculation method in the agreement itself — not in a side conversation, a term “to be established” later, or an unsigned spreadsheet.

Document performance reviews carefully

Reviews that praise performance without clearly saying whether contractual conditions were met can later be read as evidence supporting the employee’s version of events. In Hai, reviews noting that revenue targets were “exceeded” — while never mentioning hurdle rates — helped support both the breach claim and the fraudulent-concealment finding.

Treat oral modifications as real modifications

If a manager or owner tells an employee they have “earned” equity, a jury may treat that as effectively amending the agreement, whether or not that was the intent. In this case, the jury accepted that an oral agreement had extended the original three-year equity provision into a much larger, longer-running stake.

Get a business valuation clause right

Disputes over what a company (or a division of it) is worth can drive damages far higher than either side anticipated. A defined valuation methodology in the agreement reduces that risk — here, damages rested substantially on a third-party valuation the company disputed but never countered with its own documentation.

Frequently Asked Questions

Is an oral promise of equity enforceable in Michigan?

It can be, depending on the facts. In Hai, a jury found that oral statements and conduct effectively extended a written equity provision, and the Court of Appeals upheld that finding. Whether an oral modification holds up typically depends on the specific words used, the parties’ course of dealing, and whether the original agreement allowed for amendment — it is not a guarantee, and undocumented promises create real evidentiary risk for both sides.

What is a “revenue hurdle rate” in an equity compensation agreement?

It is a performance threshold that must be met before equity vests. In the Hai case, the term appeared in the written agreement but was never defined there, leaving the parties to dispute what it meant years later. To avoid that outcome, the specific number and calculation method should be written into the agreement itself, not left to be set later.

Can performance reviews affect an equity dispute?

Yes. In Hai, performance reviews that praised revenue results without ever mentioning a missed hurdle rate helped support the employee’s claim that he had met his conditions, and helped support the jury’s finding of fraudulent concealment against the employer. Businesses should make sure performance reviews accurately reflect whether contractual conditions were actually met.

How long do I have to sue over a denied equity promise in Michigan?

Michigan’s general limitations period for breach of a written contract is six years under MCL 600.5807. That period can be tolled, however, if the defendant fraudulently concealed the existence of the claim under MCL 600.5855 — which is what extended the claim at issue in Hai, filed in 2022 over conduct dating to 2011. Confirm the applicable deadline with an attorney for your specific circumstances.

The Bottom Line

Equity can be one of the most effective tools a growing Michigan business has for retaining key people — but only if the terms are unambiguous. A short conversation with an attorney when drafting or updating an equity compensation agreement is far less expensive than a jury trial over what a spreadsheet was supposed to mean.

Source: Hai v CIG Capital Advisors, Inc, Docket No. 370517, Michigan Court of Appeals (published opinion, June 18, 2026). The full opinion is available through the Michigan Court of Appeals via Justia. The opinion is subject to revision until final publication in the Michigan Appeals Reports.

Please note: This article is provided for general educational and informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship between you and the Law Offices of Maynard F. Newman, P.L.L.C. Laws change and every situation is different; you should consult a qualified attorney about your specific circumstances before acting. This content may also be considered attorney advertising.