4 ms·

The crazy thing to me is: 1) the fact that employees are granted options instead of shares is an artifact of tax law, and 2) the fact that there's a 90 day exer

by sskates 11y ago

The crazy thing to me is: 1) the fact that employees are granted options instead of shares is an artifact of tax law, and 2) the fact that there's a 90 day exercise window is also an artifact of tax law. Yet, companies constantly come up with post-hoc justifications of why only giving a 90 day window is fair. There is big resistance to change on this point. Even Ben Horowitz and Sam Altman don't think it's a clear decision! http://genius.com/B-horowitz-lecture-15-how-to-manage-annotated/ http://genius.com/B-horowitz-lecture-15-how-to-manage-annota... If you were to derive how to think about employee ownership of a company as a form of compensation from first principles, you'd never come up with options and you'd never come up with a 90-day exercise window on top of that. Those are both artifacts from tax law yet it's become the standard form of compensation!

enra 11y ago
Do you how a company would you give employees shares directly without them being taxed on the grant? One way I've seen this is with RSU double triggers: you are granted RSUs but you don't own them until the stock is actually liquid. However, at that time, you will have to pay taxes and you don't get long term capital gains. Update: Just read your link, it's crazy how on this topic, Ben goes on a rant about random things, and whether it's fair to give 10y exercise period, because the person working there doesn't somehow get that benefit. Even if you have a money, employees are not investors, they can't just throw $10-100k on one startup, without knowing liquidation preferences or anything else, and which may or may not have some kind of liquidity in the next 10 years. It's useless to give equity if most people get screwed.