Do the math on your stock options

Post by AndrewKemendo » Fri, Jan 01, 2016, 6:22 AM UTC

Mrmcfeely8 wrote: post #240

AndrewKemendo wrote: post #142

Options are for suckers. Do you want to be an investor? No? then why would you pay for stock out of your own money? At our startup everyone gets the same stock, not options, through our Equity Incentive Plan. Here's how it works. 1. We lend new employees the amount of money it would take to buy common stock on a non-recourse promissory note the collateral in this case is the stock itself. 2. The employee then buys th…

If the company goes bankrupt, though, can't a bankruptcy trustee go after the employee to try to collect on that loan?

Post by AndrewKemendo » Fri, Jan 01, 2016, 6:23 AM UTC

encoderer wrote: post #225

AndrewKemendo wrote: post #212

Earlier quoted context omitted.

Definitely isn't a recruiting tool or an ad - in fact I don't even really go into the details of the plan when I do my recruiting because most employees don't really know the difference at that point. If it was an ad it certainly wasn't effective as nobody has contacted me :p. I'm curious what advantages options give employees over a system like ours. I don't see any, and the whole point of our structure was to give…

It's not that options beat your system, it's that options are what's available and the point of this article is: do the math and understand your equity.

Post by Mrmcfeely8 » Fri, Jan 01, 2016, 6:48 AM UTC

AndrewKemendo wrote: post #241

Mrmcfeely8 wrote: post #240

Earlier quoted context omitted.

If the company goes bankrupt, though, can't a bankruptcy trustee go after the employee to try to collect on that loan?

No, the non-recourse note is collateralized with the stock.

Post by encoderer » Fri, Jan 01, 2016, 10:22 AM UTC

AndrewKemendo wrote: post #243

encoderer wrote: post #225

Earlier quoted context omitted.

It's not that options beat your system, it's that options are what's available and the point of this article is: do the math and understand your equity.

Right, and my point is that options aren't the only thing possible.

Post by jonathanwallace » Fri, Jan 01, 2016, 1:47 PM UTC

relkor wrote: post #169

jonathanwallace wrote: post #84

Earlier quoted context omitted.

If everyone asks for such things, then boards will get the message and make this standard to compete.

Or you know, the board might not be a dick. Some of us founders are less outright hostile to employees and we are definitely on the board (usually with majority when the first 20-50 employees are coming on).