5 ms·

First, divide the total number of shares outstanding by the small number of shares you expect to receive through restricted stock and options over the next coup

First, divide the total number of shares outstanding by the small number of shares you expect to receive through restricted stock and options over the next couple of years. Then, multiply this number by zero to calculate the value of your stake in the company. Finally, figure out the total amount of salary you're giving up for this equity stake over the same time period.

patrickmay 11y ago
> Then, multiply this number by zero to calculate the value of your stake in the company. Best. Metric. Ever.
Natsu 11y ago
Can't the value end up negative if you factor in taxes? Or is that only if you goof up?
- g8gggu89 11y ago
  You only pay taxes as a percentage of their value, afaik.
  - gkop 11y ago
    One way people occasionally goof up is exercising, paying tax then, but waiting to sell, whereupon the stock has lost value in the interim.
  - fredkbloggs 11y ago
    Mostly wrong. You pay taxes as a percentage of something, as of some time, after modifying that something in some way. Sometimes this means you pay more in taxes than you ever got from the thing you had, or sold, or bought, or whatever. Your searchable terms here are "ISO", "NSO", and "AMT". See also the rules for capital losses in general. Other times, especially if you're the CEO or a major shareholder in a large corporation with a large lobbying budget, it means you can buy something, make money on it, and as a thank-you from Uncle Sam, actually pay less tax on all your profits than you would have otherwise. Your searchable term here is "NOL". Isn't it great that we live in a country where the tax law is so fucking broken that all these things are common enough to have their own acronyms? I know I feel privileged, anyway.
- mcherm 11y ago
  Yes, it can under certain circumstances.
- hga 11y ago
  Also negative if it prompts them to fire you before the stock becomes worth something for real, e.g. https://en.wikipedia.org/wiki/Brian_Reid_(computer_scientist)#Google https://en.wikipedia.org/wiki/Brian_Reid_(computer_scientist...
tarr11 11y ago
This is totally correct! Except, sometimes it's wrong.

patrickmay 11y ago

> Then, multiply this number by zero to calculate the value of your stake in the company. Best. Metric. Ever.

Natsu 11y ago

Can't the value end up negative if you factor in taxes? Or is that only if you goof up?

g8gggu89 11y ago
You only pay taxes as a percentage of their value, afaik.
- gkop 11y ago
  One way people occasionally goof up is exercising, paying tax then, but waiting to sell, whereupon the stock has lost value in the interim.
- fredkbloggs 11y ago
  Mostly wrong. You pay taxes as a percentage of something, as of some time, after modifying that something in some way. Sometimes this means you pay more in taxes than you ever got from the thing you had, or sold, or bought, or whatever. Your searchable terms here are "ISO", "NSO", and "AMT". See also the rules for capital losses in general. Other times, especially if you're the CEO or a major shareholder in a large corporation with a large lobbying budget, it means you can buy something, make money on it, and as a thank-you from Uncle Sam, actually pay less tax on all your profits than you would have otherwise. Your searchable term here is "NOL". Isn't it great that we live in a country where the tax law is so fucking broken that all these things are common enough to have their own acronyms? I know I feel privileged, anyway.
mcherm 11y ago
Yes, it can under certain circumstances.
hga 11y ago
Also negative if it prompts them to fire you before the stock becomes worth something for real, e.g. https://en.wikipedia.org/wiki/Brian_Reid_(computer_scientist)#Google https://en.wikipedia.org/wiki/Brian_Reid_(computer_scientist...

tarr11 11y ago

This is totally correct! Except, sometimes it's wrong.