131–140 of 274 posts
Earlier quoted context omitted.
Yes, this strikes me as very Enron-ish throughout.
Interesting. In what ways? Enron was a public company that committed fraud.
Is there some other industry where, when a company stumbles, its employees don't get hurt? I live in Michigan, and when the car industry "stumbled" everyone I locally know at least knew someone who got hit, at the very very least with long-term stagnant wages even as their responsibilities amped up to cover the missing people, and they were the ones who came out relatively unscathed. I mean, the details of the articl…
At least with the auto industry, the unions were able to offer some protections for the worker. How many programmers belong to a union?
The cost is relatively trivial compared to a programmer's salary - about £200/yr. Unfortunately you can't claim it against tax in the UK.
I'm going to keep repeating this comment until the world hears it--I think most people joining startups are being taken advantage of without realizing it. Sorry to be repeating myself: If you're primarily interested in making money, or if you love the startup but not the compensation, you should NOT work at that startup. If you're a good developer, you can get a better deal by working at an established company and si…
I'm going to keep repeating this comment until the world hears it--I think most people joining startups are being taken advantage of without realizing it. Sorry to be repeating myself: If you're primarily interested in making money, or if you love the startup but not the compensation, you should NOT work at that startup. If you're a good developer, you can get a better deal by working at an established company and si…
This article is written as if it's the startup's fault that tax laws are irrational. Doesn't reflect well on the NYT.
But, if the company heavily compensates people with an asset that has irrational tax laws, then it does seem like they bare responsibility.
The IRS does not force these companies to improperly value the common stock. It's just the default position they take because it's cheaper for the company this way.
The 409a valuation is based on the price someone would pay for 100% of the outstanding shares of converted-to-common shares. This is much lower than preferred stock investment price (where the dollars are being put into the company to grow it, not being paid to shareholders to retire). It's even much lower than the secondary market price since that's the price for a small percentage of shares -- try selling them all and the bid/ask would fall to zero.
The price of illiquid common stock must reflect the risk-taking stance of management and the Board. Even having an $800m offer doesn't have to boost the common stock valuation so much because if management is declining those offers and swinging for the fences you can reasonably factor in that risk in the price.
Unless and until an actual IPO, companies should take a discounted future cash flow model based on single-digit future growth to demonstrate the common stock value is absolutely worthless, and everyone should be required to file 83(b).
We know its a lottery ticket, the tax code allows us to value it appropriately. The real problem is companies straight out fucking up their 409a. Common stock shareholders at Good would not be crazy to consider a lawsuit.
Earlier quoted context omitted.
It's all about risk. Unfortunately, this risk did not pay off.
If you want risk, be an entrepreneur. If you want security, be an employee for a big company. And I suppose I should add, "If you want to get screwed over, be an employee at a unicorn startup," based on this new information.
So when the company isn't doing well, the founder lays themselves off first right? No? Hm, seems like the rank and file employee takes on the risk there...
Not to mention that it's probably a lot easier for a founder to get another job than their employees. Oh and by the way, the founder has been paid more, has gotten more stock and has probably had investors pay for a lot more nice dinners/drinks than their employees.
But yeah, the founders deserve to be compensated much higher because of this "risk", yes indeed.
UK resident here: why were employees paying tax on the nominal value of the shares? Is it not possible to structure the compensation so that tax is payable when the shares are sold (capital gains) or on any dividends paid on the shares?
In some cases it might make sense to exercise stock options before you can actually sell them (e.g. if you expect the price to keep going up to save on taxes or if you're leaving the company when you typically only have a limited amount of time to exercise or lose those options).
So in these cases you now own the stock and paid taxes on it, but if the stock price falls drastically after that you might have actually paid more taxes than the stock is worth now.
I'm going to keep repeating this comment until the world hears it--I think most people joining startups are being taken advantage of without realizing it. Sorry to be repeating myself: If you're primarily interested in making money, or if you love the startup but not the compensation, you should NOT work at that startup. If you're a good developer, you can get a better deal by working at an established company and si…
Thanks for the comment, but 'investing' 100k, a sum FAR more than almost anyone reading the comment will ever see in their own bank accounts, is not 'investing' for most of us. Diversity and spreading the risk is bread and butter for almost all of us. Throwing 100k into a company you believe in' is a greater gamble than almost any reader could ever justify to their spouse and expect to stay married. You live in a ver…
One of my points, though, is that you are effectively investing $100k in the company by taking a crap deal to work there (e.g., via a $25k pay cut over 4 years of work). For that $100k, you're getting much less than you would get by simply straight-up investing $100k.