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This is not sage advice. First, percentages are meaningless. The OP needs to quantify what's at stake in absolute terms. If he has justification to negotiate o

This is not sage advice. First, percentages are meaningless. The OP needs to quantify what's at stake in absolute terms. If he has justification to negotiate or otherwise take action to protect his interests, he should do so based on an understanding of the dollar amounts involved, not percentages. When you negotiate around percentages, it's very easy to win the negotiation but lose money. Second, the scenario described is a huge red flag. The OP's company raised capital from investors. Ostensibly the options pool was addressed as part of the funding. The OP's post suggests that the options pool was way too small but instead of expanding it (and diluting everybody), which is typical, the company's founders and the OP are forfeiting a portion of their piece of the pie, which is not at all typical. Why? The OP needs to understand the true state of his employer's equity structure. What you refer to as a "newly valuable company" could just as easily be a cap table disaster. If that is the case, negotiating around percentages won't save the OP from a bad outcome.

darkmighty 12y ago
It's not just present dollar amount, it's expected dollar amount, so percentages are quite important in case the has high expectations.
- 7Figures2Commas 12y ago
  Where did I state that the OP should only determine present dollar value? I simply wrote "The OP needs to quantify what's at stake in absolute terms." Percentages are meaningless unless you have some idea of what x% of something is worth, whether today or tomorrow. As I wrote, it is possible to win a negotiation around percentages but lose money. I could fairly easily give you 25% of a company and structure the equity so that upon its sale, you netted next to nothing. On this note, please recognize that figuring out what's at stake requires the OP to take an even bigger step back. The OP indicates that he was given a 10% equity stake in the company in the form of stock options when he was a contractor. As a contractor, he would only be able to receive non-qualified stock options. The tax treatment of these is almost always less favorable to the recipient than incentive stock options, which can only be granted to employees. Now that the OP is an employee of the company, he may need to consider that the structure of his equity is sub-optimal. If there's justification for a negotiation here, the structure of the OP's equity could be just as important as equity amounts. Further complicating matters is the OP's status, as it sounds like he's a nonresident alien. Cross-border tax issues can be very complicated and at a minimum, the OP should understand the implications of transactions involving his equity. Bottom line: simply jumping into a negotiation over percentages is putting the cart way before the horse. The OP should seek the counsel of a qualified attorney and tax professional before he tries to address his concerns directly with the company.

darkmighty 12y ago

It's not just present dollar amount, it's expected dollar amount, so percentages are quite important in case the has high expectations.

7Figures2Commas 12y ago
Where did I state that the OP should only determine present dollar value? I simply wrote "The OP needs to quantify what's at stake in absolute terms." Percentages are meaningless unless you have some idea of what x% of something is worth, whether today or tomorrow. As I wrote, it is possible to win a negotiation around percentages but lose money. I could fairly easily give you 25% of a company and structure the equity so that upon its sale, you netted next to nothing. On this note, please recognize that figuring out what's at stake requires the OP to take an even bigger step back. The OP indicates that he was given a 10% equity stake in the company in the form of stock options when he was a contractor. As a contractor, he would only be able to receive non-qualified stock options. The tax treatment of these is almost always less favorable to the recipient than incentive stock options, which can only be granted to employees. Now that the OP is an employee of the company, he may need to consider that the structure of his equity is sub-optimal. If there's justification for a negotiation here, the structure of the OP's equity could be just as important as equity amounts. Further complicating matters is the OP's status, as it sounds like he's a nonresident alien. Cross-border tax issues can be very complicated and at a minimum, the OP should understand the implications of transactions involving his equity. Bottom line: simply jumping into a negotiation over percentages is putting the cart way before the horse. The OP should seek the counsel of a qualified attorney and tax professional before he tries to address his concerns directly with the company.