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The typical option agreement says that the stock you may purchase is subject to a right of repurchase by the company, and that right (by the company) lapses ove
by jwatte 15y ago
The typical option agreement says that the stock you may purchase is subject to a right of repurchase by the company, and that right (by the company) lapses over time. So, I imagine that is totally negotiable until such time that that right lapses. It means going back on your word from the time of hire, but corporations go back on their word all the time, usually because it's believed to increase value for shareholders overall.
I imagine one way to make it non-claw-backable is to give the right to purchase outright right away, or to have a much shorter vesting period, although that may have tax ramifications, and be messy for the stock plan/s to deal with.
Regarding whether anyone's contributions really are worth $4B or whatever -- that's the lottery. Lots of start-ups fail, and lots of possibly valuable contributions are then valued at 0 stock. If a person contributed to a healthy start for something that grows really big, they may win the lottery; that's part of the appeal of Silicon Valley start-ups. The more companies close off this lottery ticket avenue, the less that ticket will be worth, and the worse the ecosystem will do in the long run.
But if you stand to make billions in the short run, who cares about the long run? Probably true on both sides.
- jaekwon 15y agoBy 'right of repurchase', are you referring to the right of the company to purchase your vested shares, should you choose to sell them? If so, it's not related to this issue.
- jwatte 15y agoNo, i am referring to how vesting is actually expressed (at least in some grants I've seen). Another way to say it: "like it or not, unvested shares are re-negotiable." Get in early and vest as much as you can, if that's important!
- ghshephard 15y agoThe right-of-repurchase grants that I've seen have always been 83-B grants where the company lets me buy all the stock up front so I can start the tax clock. The right of repurchase lapses on a vesting schedule, just like options. From that perspective, there isn't much difference between (A) Vesting Stock, and (B) Lapsing over time a Restricted Repurchase agreements. Nobody is going back on their word - it's just a different way of vesting.
- jpdoctor 15y agoI agree. In addition to the 83-B election, I've seen a right-of-first-refusal for share repurchase. (Third party offers you $X/share for your shares, the company has the right to purchase at that price instead.) I've never seen a "we can repurchase shares as we see fit" clause.