4 ms·

I read down pretty far and did not see this basic advice: you need a lawyer. Hire a very good one: they are cheaper than poor lawyers by an order of magnitude.

I read down pretty far and did not see this basic advice: you need a lawyer. Hire a very good one: they are cheaper than poor lawyers by an order of magnitude. That lawyer will review your agreements, the state laws and the communications with the company and tell you where you’re at. You could all go in together for the lawyer btw if you have the same contract. I bet that lawyer will tell you (if this is in California) that you just need to send a letter saying “cool guys, send the shares, I’ll worry about the taxes. I don’t consent to forfeiture.” But, crucially, I am not a lawyer and I haven’t read your agreements. anyway I would not stress over this, but I would act quickly, don’t sign anything, don’t communicate with the company unt you’ve talked to the lawyer, and know that worst case you will be able to find a loan to bridge this. It may actually be a good candidate for a venture debt firm, but either way the lawyer you hire will probably have some leads. Congrats on the IPO!

greenspam 2y ago
Thank you! We are definitely contacting lawyers.
choppaface 2y ago
And/or try contacting a bank (one of the underwriters?) to see if they’ll loan you cash for taxes using the RSUs as collateral. A lot of early Uber employees were able to get loans to exercise and cover taxes, tho these were rather large sums. That said the shares are liquid so less risk.
emilsedgh 2y ago
How would you find good lawyers that have experience dealing with this stuff? I had to sign stuff like this and the lawyers I was sent to seemed they didn't really have much relevant experience and I'm deeply uncomfortable with their assessments given how confused they looked.
- rwmj 2y ago
  You can't just use your random family lawyer. You need one who specialises in corporate law, VCs, RSUs and so on. Who that will be depends entirely on your location. I know a company that does this in London, but that's no use at all to this poster.
  - 0xFF0123 2y ago
    For someone based in London, are you able to share?
    - rwmj 2y ago
      I've used Bird & Bird in the past. Expensive though!
      - emilsedgh 2y ago
        How about US/California?
        jchallis 2y ago
        Rimon Law is fantastic.
        emilsedgh 2y ago
        Thank You.
        x0x0 2y ago
        David at Grellas Shah would be my recommendation. They're a boutique-y startup-oriented law firm that understands these issues.
  - amalcon 2y ago
    Your random family lawyer, if they are any good, will refer you to a specialist they know for something like this. That's a decent way to find one.
- x0x0 2y ago
  call the intake people at Grellas Shah and ask for David Siegel, or for a different partner as appropriate.
- brudgers 2y ago
  Contact the state bar. They provide relevant referrals to the public. It is part of how they justify their monopoly.
kelnos 2y ago
> I bet that lawyer will tell you (if this is in California) that you just need to send a letter saying “cool guys, send the shares, I’ll worry about the taxes. I don’t consent to forfeiture.” Not sure about this. A random thing[0] I found says: "RSUs are considered supplemental income, and as such, the income you receive from them is subject to withholding taxes. The IRS requires a federal withholding rate of 22% for supplemental income up to $1 million, and 37% for income exceeding that amount." (It also links to the relevant IRS publication, but I am not interested in poring over it right now.) So I believe the employer is required to do that withholding. It does seem pretty sketchy that current employees have access to a sell-to-cover option, but former employees do not. This feels like the company trying to screw over former employees, since they don't care if a former employee gets mad at them. Over the years I've heard of quite a few companies (and founders) who have this bizarre, messed-up belief that employees who leave the company pre-IPO shouldn't be entitled even to their vested equity. I glanced through an old RSU plan doc from a former employer, and it does talk about withholding, including a sell-to-cover option, but the wording sounds (to me, anyway; IANAL) like they aren't required to offer that option, only that they may do so. Obviously I have no idea what OP's legal docs say (or if I'm even interpreting this doc I do have correctly); a lawyer would need to go over them. [0] https://www.harnesswealth.com/articles/what-you-need-to-know-about-restricted-stock-units-rsus/ https://www.harnesswealth.com/articles/what-you-need-to-know...
- ryaniscool 2y ago
  I think this illustrates perfectly why they should talk to a lawyer. I read through the link you posted. They don't mention anything about sec. 83(b) elections. It's a common strategy to avoid paying taxes until the RSU's are liquidated. I know about it because my current employer structured the RSU's this way. Every ESOP and RSU plan I've ever participated in has been slightly different. Your link focuses on a very specific set of circumstances.
  - PopAlongKid 2y ago
    >They don't mention anything about sec. 83(b) elections Perhaps because it is inapplicable. 83(b) election can only be used for property that has been transferred but not vested. (Having a lock-up period does not mean the property is unvested).
Jakob 2y ago
Most countries have mandatory tax withholding by the employer, but not all (e.g. Singapore, Indonesia). In that case you would pay the taxes yourself. What I haven’t heard yet, is not being allowed to sell on the settlement date. That puts you in a serious risk: Worst case, the stocks fall to zero, but you paid taxes from your private money. This is net-negative. To avoid that risk, either the employer needs to withhold the taxes or needs to allow you to sell the tax amount on the first day.
caseysoftware 2y ago
Your "talk to a lawyer asap" advice was perfect. Stop there. In the US, I've worked with the team at https://www.optimalcounsel.com/ https://www.optimalcounsel.com/ before. They're great and founder-focused so generally get it and are reasonable on pricing. Before you talk to an attorney, make sure you have your agreements together. That is likley your initial employment agreement, any grant docs, your separation docs, and the current agreement they want you to sign. And yes, don't wait. If you need to take action, you may need to have time to ship docs, send wire transfers, etc.
- amluto 2y ago
  And also time to retain an attorney. A reputable firm of any size is likely to need to check to see whether they are conflicted and to write a retainer agreement. They won’t charge for these services, but it’s not instantaneous.

greenspam 2y ago

Thank you! We are definitely contacting lawyers.

choppaface 2y ago

And/or try contacting a bank (one of the underwriters?) to see if they’ll loan you cash for taxes using the RSUs as collateral. A lot of early Uber employees were able to get loans to exercise and cover taxes, tho these were rather large sums. That said the shares are liquid so less risk.

emilsedgh 2y ago

How would you find good lawyers that have experience dealing with this stuff? I had to sign stuff like this and the lawyers I was sent to seemed they didn't really have much relevant experience and I'm deeply uncomfortable with their assessments given how confused they looked.

rwmj 2y ago
You can't just use your random family lawyer. You need one who specialises in corporate law, VCs, RSUs and so on. Who that will be depends entirely on your location. I know a company that does this in London, but that's no use at all to this poster.
- 0xFF0123 2y ago
  For someone based in London, are you able to share?
  - rwmj 2y ago
    I've used Bird & Bird in the past. Expensive though!
    - emilsedgh 2y ago
      How about US/California?
      - jchallis 2y ago
        Rimon Law is fantastic.
        emilsedgh 2y ago
        Thank You.
      - x0x0 2y ago
        David at Grellas Shah would be my recommendation. They're a boutique-y startup-oriented law firm that understands these issues.
- amalcon 2y ago
  Your random family lawyer, if they are any good, will refer you to a specialist they know for something like this. That's a decent way to find one.
x0x0 2y ago
call the intake people at Grellas Shah and ask for David Siegel, or for a different partner as appropriate.
brudgers 2y ago
Contact the state bar. They provide relevant referrals to the public. It is part of how they justify their monopoly.

kelnos 2y ago

> I bet that lawyer will tell you (if this is in California) that you just need to send a letter saying “cool guys, send the shares, I’ll worry about the taxes. I don’t consent to forfeiture.” Not sure about this. A random thing[0] I found says: "RSUs are considered supplemental income, and as such, the income you receive from them is subject to withholding taxes. The IRS requires a federal withholding rate of 22% for supplemental income up to $1 million, and 37% for income exceeding that amount." (It also links to the relevant IRS publication, but I am not interested in poring over it right now.) So I believe the employer is required to do that withholding. It does seem pretty sketchy that current employees have access to a sell-to-cover option, but former employees do not. This feels like the company trying to screw over former employees, since they don't care if a former employee gets mad at them. Over the years I've heard of quite a few companies (and founders) who have this bizarre, messed-up belief that employees who leave the company pre-IPO shouldn't be entitled even to their vested equity. I glanced through an old RSU plan doc from a former employer, and it does talk about withholding, including a sell-to-cover option, but the wording sounds (to me, anyway; IANAL) like they aren't required to offer that option, only that they may do so. Obviously I have no idea what OP's legal docs say (or if I'm even interpreting this doc I do have correctly); a lawyer would need to go over them. [0] https://www.harnesswealth.com/articles/what-you-need-to-know-about-restricted-stock-units-rsus/ https://www.harnesswealth.com/articles/what-you-need-to-know...

ryaniscool 2y ago
I think this illustrates perfectly why they should talk to a lawyer. I read through the link you posted. They don't mention anything about sec. 83(b) elections. It's a common strategy to avoid paying taxes until the RSU's are liquidated. I know about it because my current employer structured the RSU's this way. Every ESOP and RSU plan I've ever participated in has been slightly different. Your link focuses on a very specific set of circumstances.
- PopAlongKid 2y ago
  >They don't mention anything about sec. 83(b) elections Perhaps because it is inapplicable. 83(b) election can only be used for property that has been transferred but not vested. (Having a lock-up period does not mean the property is unvested).

Jakob 2y ago

Most countries have mandatory tax withholding by the employer, but not all (e.g. Singapore, Indonesia). In that case you would pay the taxes yourself. What I haven’t heard yet, is not being allowed to sell on the settlement date. That puts you in a serious risk: Worst case, the stocks fall to zero, but you paid taxes from your private money. This is net-negative. To avoid that risk, either the employer needs to withhold the taxes or needs to allow you to sell the tax amount on the first day.

caseysoftware 2y ago

Your "talk to a lawyer asap" advice was perfect. Stop there. In the US, I've worked with the team at https://www.optimalcounsel.com/ https://www.optimalcounsel.com/ before. They're great and founder-focused so generally get it and are reasonable on pricing. Before you talk to an attorney, make sure you have your agreements together. That is likley your initial employment agreement, any grant docs, your separation docs, and the current agreement they want you to sign. And yes, don't wait. If you need to take action, you may need to have time to ship docs, send wire transfers, etc.

amluto 2y ago
And also time to retain an attorney. A reputable firm of any size is likely to need to check to see whether they are conflicted and to write a retainer agreement. They won’t charge for these services, but it’s not instantaneous.