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You should know at minimum the current value of the shares (i.e. last funding round price) and the number of shares + options outstanding. Options are also hor

by tyrelb 17y ago

You should know at minimum the current value of the shares (i.e. last funding round price) and the number of shares + options outstanding. Options are also horrible - unless you have some agreement which allows you to exercise them upon a liquidity event (i.e. buy-out, IPO). Get shares vs. options when given a chance.

tptacek 17y ago
I've never even heard of an employee managing to negotiate the structure of their equity grant. It's not unusual for your hiring manager --- even if they're a founder --- to have their hands tied on the number of shares you're getting, let alone the vesting or the vehicle; those are board decisions. Shares vs. options may also not be a meaningful distinction. Any equity plan that has seen a lawyer has been scrubbed so that employees have no rights. If you "own" shares in a funded company, the odds are strong that they can be taken back from you (or devalued totally) at the whim of the board. The place where the company probably has the most negotiating flexibility is US dollars. Employees get hired for wildly different salaries. Don't waste time bickering about options vs. shares: spend your time getting the dollar number up.
portman 17y ago
In the US, if you are given shares of a company when you join, you must pay taxes on those shares. Let's say the startup is currently valued at $5M, and you are given shares for 1%. You need to write a check to the IRS for your share of $50,000 in income. Alternatively, if you are give the equivalent number of options, you do not have any tax liability until you exercise those options. This is one reason (of many reasons) why it is almost unheard of for a startup to grant employees shares instead of options.
- tptacek 17y ago
  Restricted stock is common in startups (there are company structures that may require it). Vesting structure and 83(b) elections also matter. Expecting 'grellas to offer a much more coherent explanation momentarily.

by tyrelb 17y ago

tptacek 17y ago

I've never even heard of an employee managing to negotiate the structure of their equity grant. It's not unusual for your hiring manager --- even if they're a founder --- to have their hands tied on the number of shares you're getting, let alone the vesting or the vehicle; those are board decisions. Shares vs. options may also not be a meaningful distinction. Any equity plan that has seen a lawyer has been scrubbed so that employees have no rights. If you "own" shares in a funded company, the odds are strong that they can be taken back from you (or devalued totally) at the whim of the board. The place where the company probably has the most negotiating flexibility is US dollars. Employees get hired for wildly different salaries. Don't waste time bickering about options vs. shares: spend your time getting the dollar number up.

portman 17y ago

In the US, if you are given shares of a company when you join, you must pay taxes on those shares. Let's say the startup is currently valued at $5M, and you are given shares for 1%. You need to write a check to the IRS for your share of $50,000 in income. Alternatively, if you are give the equivalent number of options, you do not have any tax liability until you exercise those options. This is one reason (of many reasons) why it is almost unheard of for a startup to grant employees shares instead of options.

tptacek 17y ago
Restricted stock is common in startups (there are company structures that may require it). Vesting structure and 83(b) elections also matter. Expecting 'grellas to offer a much more coherent explanation momentarily.