4 ms·

This is a bit extreme. I think short exercise windows are fair, it's the tax code that makes it suck. Multiclass stock should be illegal outright, while dilutio

This is a bit extreme. I think short exercise windows are fair, it's the tax code that makes it suck. Multiclass stock should be illegal outright, while dilution is a known unknown you factor into your negotiation - depending on how early you join.

save_ferris 6y ago
One of the biggest gripes I have with the current state of equity for employees is that it's treated like compensation while not being legally protected like compensation. A concrete example. I was courted by a company a couple of years ago to join their engineering team and I was pretty set on joining the company until I spoke with a former employee who told me that this company had reneged on giving him the option to purchase his ISOs because they didn't like that he was leaving after two years. That's completely unacceptable behavior for a company, and it completely changed the way I look at equity. A company can't come at for my already-cashed paychecks, but they can absolutely prevent me from purchasing my options for pretty much any reason.
- scottjg 6y ago
  is that legal? if they issued you options... you have the "option" to purchase them?
  - lock-free 6y ago
    It's called a clawback (1) and as a policy are pretty common. I wouldn't assume we have the full story from GP, it could be the startup screwed someone over, it could be the person did things that triggered a clawback. Not all are enforceable. (1) https://www.mystockoptions.com/content/how-does-a-clawback-work-to-take-away-gains-from-my-equity-compensation https://www.mystockoptions.com/content/how-does-a-clawback-w...
    - save_ferris 6y ago
      The problem is that even if a company illegally triggers a clawback, it's a civil matter and requires the employee to pony up for legal action against the company. That might be worth it if you're already certain that your equity has significant value, but most people aren't going to litigate for relatively small amounts of stock in small startups with uncertain futures.
- lock-free 6y ago
  ISOs are bonus compensation and treated a bit differently under the law than non qualified options, but point taken.
- jbay808 6y ago
  Were the options already vested at that point?
redshirtrob 6y ago
I'd say it's the tax code that's at fault, but that doesn't stop folks from leveraging the tax code to their advantage. As a single datapoint, I was in the final stages of interviews a while back. I had a call with the CEO where we got into some details about company funding, equity compensation, etc. When I pressed him on the 90 day exercise window he acknowledged their VCs liked it that way because it meant options flowed back into the pool when folks couldn't afford to exercise. I adjusted my salary numbers accordingly and we were unable to find common ground. No, I don't feel like naming and shaming.
walshemj 6y ago
In the UK HMRC approved schemes ban the use of different classes for employees and multi class listings are not looked on kindly.

save_ferris 6y ago

One of the biggest gripes I have with the current state of equity for employees is that it's treated like compensation while not being legally protected like compensation. A concrete example. I was courted by a company a couple of years ago to join their engineering team and I was pretty set on joining the company until I spoke with a former employee who told me that this company had reneged on giving him the option to purchase his ISOs because they didn't like that he was leaving after two years. That's completely unacceptable behavior for a company, and it completely changed the way I look at equity. A company can't come at for my already-cashed paychecks, but they can absolutely prevent me from purchasing my options for pretty much any reason.

scottjg 6y ago
is that legal? if they issued you options... you have the "option" to purchase them?
- lock-free 6y ago
  It's called a clawback (1) and as a policy are pretty common. I wouldn't assume we have the full story from GP, it could be the startup screwed someone over, it could be the person did things that triggered a clawback. Not all are enforceable. (1) https://www.mystockoptions.com/content/how-does-a-clawback-work-to-take-away-gains-from-my-equity-compensation https://www.mystockoptions.com/content/how-does-a-clawback-w...
  - save_ferris 6y ago
    The problem is that even if a company illegally triggers a clawback, it's a civil matter and requires the employee to pony up for legal action against the company. That might be worth it if you're already certain that your equity has significant value, but most people aren't going to litigate for relatively small amounts of stock in small startups with uncertain futures.
lock-free 6y ago
ISOs are bonus compensation and treated a bit differently under the law than non qualified options, but point taken.
jbay808 6y ago
Were the options already vested at that point?

redshirtrob 6y ago

I'd say it's the tax code that's at fault, but that doesn't stop folks from leveraging the tax code to their advantage. As a single datapoint, I was in the final stages of interviews a while back. I had a call with the CEO where we got into some details about company funding, equity compensation, etc. When I pressed him on the 90 day exercise window he acknowledged their VCs liked it that way because it meant options flowed back into the pool when folks couldn't afford to exercise. I adjusted my salary numbers accordingly and we were unable to find common ground. No, I don't feel like naming and shaming.

walshemj 6y ago

In the UK HMRC approved schemes ban the use of different classes for employees and multi class listings are not looked on kindly.