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I would never work for a company that doesn't allow early exercise. Whether or not you plan to do it, you have to wonder about the attitude of those in charge i

I would never work for a company that doesn't allow early exercise. Whether or not you plan to do it, you have to wonder about the attitude of those in charge if they don't allow early exercise.

jdavis703 9y ago
Allowing early exercise is a legal and accounting headache. Many small startups have a hard time even getting stock option agreements to employees. When you're new, small, and possibly don't even have an HR person you can't really spend time on frivolous things like early exercise.
- fossuser 9y ago
  I also thought that early exercise at a certain point could force a company to go public, but it's possible I'm mixing up laws. I think it had to do with how many share holders you could have, but I think that law also changed to not include employees as share holders.
  - jdavis703 9y ago
    The JOBS Act changed this rule [0]: "In order to mandate becoming an SEC reporting company, you now would have to have $10 million in assets and at least 2000 shareholders or 500 shareholders who are not accredited investors. Stock issued pursuant to an employee compensation plan would not be counted for this purpose." 0: https://investmentbank.com/summary-of-jobs-bill-and-update/ https://investmentbank.com/summary-of-jobs-bill-and-update/
- drfuchs 9y ago
  Not sure where you’re getting the idea that it’s a hassle to offer early exercise. The 4-person company I joined back when offered early-exercise without my even asking, and it was a huge win: I just had to risk a few thousand dollars (since the valuation was low), and it meant I wasn’t forced to later exercise and sell (in order to cover taxes) as they vested, or reached the end of their exercisabilty, or when the company went public, or when it later got bought out by a bigger public company, or even when I left their employment. Instead, I got to decide when to cash in and owe taxes. But you have to be a pretty early employee for this to work well, and not require a big cash outlay up front.
- s73ver_ 9y ago
  Compensating your employees is not a "frivolous thing".

I would never work for a company that doesn't allow early exercise. Whether or not you plan to do it, you have to wonder about the attitude of those in charge if they don't allow early exercise.

jdavis703 9y ago

Allowing early exercise is a legal and accounting headache. Many small startups have a hard time even getting stock option agreements to employees. When you're new, small, and possibly don't even have an HR person you can't really spend time on frivolous things like early exercise.

fossuser 9y ago
I also thought that early exercise at a certain point could force a company to go public, but it's possible I'm mixing up laws. I think it had to do with how many share holders you could have, but I think that law also changed to not include employees as share holders.
- jdavis703 9y ago
  The JOBS Act changed this rule [0]: "In order to mandate becoming an SEC reporting company, you now would have to have $10 million in assets and at least 2000 shareholders or 500 shareholders who are not accredited investors. Stock issued pursuant to an employee compensation plan would not be counted for this purpose." 0: https://investmentbank.com/summary-of-jobs-bill-and-update/ https://investmentbank.com/summary-of-jobs-bill-and-update/
drfuchs 9y ago
Not sure where you’re getting the idea that it’s a hassle to offer early exercise. The 4-person company I joined back when offered early-exercise without my even asking, and it was a huge win: I just had to risk a few thousand dollars (since the valuation was low), and it meant I wasn’t forced to later exercise and sell (in order to cover taxes) as they vested, or reached the end of their exercisabilty, or when the company went public, or when it later got bought out by a bigger public company, or even when I left their employment. Instead, I got to decide when to cash in and owe taxes. But you have to be a pretty early employee for this to work well, and not require a big cash outlay up front.
s73ver_ 9y ago
Compensating your employees is not a "frivolous thing".