3 ms·
Second, my intention is for all Tesla employees to remain shareholders of the company, just as is the case at SpaceX. If we were to go private, employees would
by shawn 8y ago
Second, my intention is for all Tesla employees to remain shareholders of the company, just as is the case at SpaceX. If we were to go private, employees would still be able to periodically sell their shares and exercise their options. This would enable you to still share in the growing value of the company that you have all worked so hard to build over time.
How does this work as a private company?
- Voloskaya 8y agoPrivate companies are still allowed to give share to employees. Employees are then allowed to sell their stock periodically (every 6 months in this case).
- shawn 8y agoRight, but with who?
- Voloskaya 8y agoDepends, the company could buy back, or during a founding round, some part of that founding can be reserved to buy employee shares. External investors are also allowed to buy from employees during this period.
- lccarrasco 8y agoCompanies have buyback programs or you could sell them directly to other shareholders.
- anthonybsd 8y agoOther private investors (typically institutional ones), or if the company has enough cash, the company itself.
- JumpCrisscross 8y ago> Employees are then allowed to share their stock periodically (every 6 months in this case) Some companies do periodic buybacks. Private shares can generally be sold at any time to accredited investors.
- peeters 8y agoThe main difference though is sell to whom? In the case of a public company, you sell your shares via the market to whomever will buy them. In the case of a private company, you're selling the shares back to the company, and the valuation is formulaic instead of market-based (unless there is some kind of private "market" that continues, but I've never seen that and would doubt its legality).
- hibikir 8y agoThis is not an uncommon arrangement in companies that plan to remain private forever, or just have no rush to IPO. Without some exercise clause, it's hard to compete with public tech companies on compensation: I've seen way too many people stuck in companies that they've worked on for 4-5 years, but when leaving meant throwing away all the stock compensation, as the costs of exercise are not affordable without a seller. Typically companies in those situations have investors from earlier rounds that want to increase their holdings, and the board doesn't have a problem letting get a percentage or two of extra shares, so they create some kind of liquidity opportunity, with the company serving as an intermediary between the employees and the investors.