5 ms·
Here's one of the points of stock: If you want a stake in a company you have to buy it (it can't just be given to you). A lot of employees don't have the cash o
by tdaltonc 10y ago
Here's one of the points of stock: If you want a stake in a company you have to buy it (it can't just be given to you). A lot of employees don't have the cash on hand to buy stock so companies issue options instead. And even if they did, they'd risk loosing that money. You can't loose money on an option.
Here's another: Startups can get in trouble for selling stock to people who aren't 'accredited investor' (basically means "already rich"). This is changing, but it's still a problem.
- cm3 10y agoI've been offered a stake at a privately funded startup for a lower salary and that's reasonable and realistic. Had they offered me options instead I would have walked away sooner than I did. Trading salary for a stake is a gamble, but doing the same for options is like a quadruple mortgage.
- ropiku 10y agoThe problem with giving outright shares compared to options is you owe taxes on that. In the taxman view you got something (shares valued via 409A) on which you have to pay taxes even if the shares you got are not liquid.
- jsprogrammer 10y agoI don't think becoming an owner is necessarily deferred compensation.
- delinka 10y agoStock can indeed just be given to you via a "stock grant." The value at the time of the grant constitutes income (for the purposes of income tax calculations in the US.)
- cm3 10y agoI don't think the requirement to buy a stake is the same rule globally. I've heard of people who got a stake just for joining with a lower salary but didn't put money into the company, just their work.