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If you were going to do it from a pure accounting perspective, you'd take the expected value of the options + salary and compare directly. You should probably a
by svachalek 13y ago
If you were going to do it from a pure accounting perspective, you'd take the expected value of the options + salary and compare directly. You should probably also figure in high value benefits like 401(k) match.
The problem there is, the expected value is more or less the current market value of the options (if you believe in anything approaching an efficient market), which is more or less the strike price times the number of shares. So, often these are in the neighborhood of $10k over 4 years or $2500/yr.
In other words, don't try to talk yourself into it from an accounting perspective.
- spacehome 13y agoMaybe. But just looking at expected value ignores risk. Most people are risk averse, especially at the amounts of money we're talking about here.
- svachalek 13y agoExpected value is not $millions. Expected value is a few hundred $k (usually, if you are realistic about the potential of the business and your tiny share as an employee) MULTIPLIED by the relatively small chance of hitting that exit, say 1%. In short, a few thousand dollars, which is approximately what you get by multiplying out the strike price. IMHO it takes risk into account in a very sobering way.
- spacehome 13y ago> Expected value is not $millions. Speak for yourself.