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A few things would help * Options should not have a 3 month expiration after a person leaves the company. Anything vested should be exercisable 10 years after

A few things would help * Options should not have a 3 month expiration after a person leaves the company. Anything vested should be exercisable 10 years after they were granted no matter what. * Give people a starting bonus for early exercise * Allow sales of exercised shares on secondary markets, or guarantee in writing X shares will be purchasable by your investor pool so some of the equity could be gained While your story might be great and fair, there are far too many stories of useless stock options in the world for many people to take a huge risk like this. Between that and the average age of companies going public trending up, it feels like a bad trade off. Stock Options don't pay mortgages.

trytozoom 6y ago
I've actually talked to our lawyers and investors about some of these. 1.) More than 3 months expiration gets tricky legally and I'm not sure it's actually fair. At that point I'm told we can't grant them as ISOs, they have to be NSOs or RSUs which could have poor tax profiles. Investors are also not keen, because you're basically giving free optionality that pretty much nobody else has. Essentially a 10 year exercise window means you get to just wait and see and only put in money when it's a sure thing. You don't even need to put in time if the option is vested. This while others who come later likely can't benefit from the same treatment (because the awards will be taxable as NSOs, and at that point more than trivial in paper value), and while investors and founders have put in cash to purchase the shares. 2.) Early exercise we have offered and will continue to offer. It's tricky because those have to be NSOs as well, but it's totally something we do. We have given signing bonuses (I hate doing this as a general rule, but it's what we have to do to get the talent), could look at making that more tied to the early exercise in some way. Again I'm not sure how the tax side plays out for the employee though. Generally this is something I support, glad to see it'd be helpful. 3.) I'm not sure what restrictions we have but I think we do restrict secondaries. For very early stage companies it's hard to write these promises of future purchases down, there's too much uncertainty on how they plays out over the long term. It can spook investors to have non-standard clauses like this, and the lawyers get very upset which means they charge us more money. That said, it's worth thinking about how to accomplish the same outcome. Keep in mind we are paying a decent base salary. It's actually strange to me how the compensation market in the bay area essentially discounts base pay because FAANG have had insane stock trajectories. When we recruit in other markets base pay is the main negotiating point, not equity. Thanks for the feedback, this is helpful!

trytozoom 6y ago

I've actually talked to our lawyers and investors about some of these. 1.) More than 3 months expiration gets tricky legally and I'm not sure it's actually fair. At that point I'm told we can't grant them as ISOs, they have to be NSOs or RSUs which could have poor tax profiles. Investors are also not keen, because you're basically giving free optionality that pretty much nobody else has. Essentially a 10 year exercise window means you get to just wait and see and only put in money when it's a sure thing. You don't even need to put in time if the option is vested. This while others who come later likely can't benefit from the same treatment (because the awards will be taxable as NSOs, and at that point more than trivial in paper value), and while investors and founders have put in cash to purchase the shares. 2.) Early exercise we have offered and will continue to offer. It's tricky because those have to be NSOs as well, but it's totally something we do. We have given signing bonuses (I hate doing this as a general rule, but it's what we have to do to get the talent), could look at making that more tied to the early exercise in some way. Again I'm not sure how the tax side plays out for the employee though. Generally this is something I support, glad to see it'd be helpful. 3.) I'm not sure what restrictions we have but I think we do restrict secondaries. For very early stage companies it's hard to write these promises of future purchases down, there's too much uncertainty on how they plays out over the long term. It can spook investors to have non-standard clauses like this, and the lawyers get very upset which means they charge us more money. That said, it's worth thinking about how to accomplish the same outcome. Keep in mind we are paying a decent base salary. It's actually strange to me how the compensation market in the bay area essentially discounts base pay because FAANG have had insane stock trajectories. When we recruit in other markets base pay is the main negotiating point, not equity. Thanks for the feedback, this is helpful!