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Are there realistic alternatives to options? The point of them seems to be to attracting employees at less than market rate with the incentive that if the compa
by slyall 10y ago
Are there realistic alternatives to options? The point of them seems to be to attracting employees at less than market rate with the incentive that if the company grows they will get a financial reward. And doing so in such a way that it doesn't cost the company too much upfront.
Perhaps the company could buy a financial instrument from a company (secured against a portion of shares) that paid out employees according to a certain formula. If the company made it big the finance company would pay the workers and then recoup the cost from it's shareholding. IF the company died then the workers lose nothing.
- mahyarm 10y agoDon't do options, just give the employees the stock and you eat the tax bill. If that tax bill becomes too large to be worth it, then it's time to give your employees RSUs. But you say, how about vesting and such? It's a waste to pay those taxes if the guy leaves after 2 years. You just paid 2 years of taxes for no reason! That means in practice you'll be giving RSUs around the series A or B funding point. Another option is you give the employees a non-recourse loan to 83b purchase their options on hiring. The loan is due on a liquidity event when it's higher than the price of the options. This makes it a tax optimal and zero-cost way to give stock to your employees. I don't know if that is legal although. Another option is to make your options just expire after 100 years.