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Why I will not exercise my GitLab stock options

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Re: Why I will not exercise my GitLab stock options

#171

Post by hkmurakami »

pfarnsworth wrote: post #156
hkmurakami wrote: post #75

Earlier quoted context omitted.

That'll apply to the strike price as well as the current "valutation", so the multiple factor between the two valuations should be around the same regardless (a strike price of a non trivial number like $0.27 suggests that a 409a valuation was already in place to price the options)

I actually have no idea what you're talking about. 0.27 strike price was the 409A valuation at the time that the options were issued. There is usually another 409A valuation after the funding round. But we don't know what that value is. You can speculate, but using the funding round as the amount is wrong.

There's typically a lower bound of 1/10 the paper valuation, otherwise you risk the IRS coming after you at some future date. That relative lower bound ratio should be consistent across rounds, hence I'm approximating with a paper valuation ratio with a fudge factor of 2.

Re: Why I will not exercise my GitLab stock options

#172

Post by angry-hacker »

syshum wrote: post #143
angry-hacker wrote: post #70

Off topic but I hope this medium.com trend starts to fade. I can't read the damn thing on my mobile when there are social sharing icons AND green open in app icon floating, taking room on my small screen. Why would I want your app or open it on app? It's s damn simple blog not some kind of webapp. Svbtl.com was also a thing here time ago, why did that platform become uncool?

>>I can't read the damn thing on my mobile Continuing the off topic nature....I am still at a loss as to why people want to read websites on a mobile device, even if you have a 10in tablet is terrible experience IMO... I will take my 3 27in monitors over tiny phone display all day long... Medium looks fine for me...

I read hn every night in my bed before I go to sleep. My sleeping pill kicks in in 38 min and that's the time I use for HN for the past 5 years.

I agree a monitor is better, especially 3 and 27in,but I won't take them to bed with me. :)

Re: Why I will not exercise my GitLab stock options

#173

Post by rsanek »

hkmurakami wrote: post #47
nandemo wrote: post #38

Earlier quoted context omitted.

> These 15,000, or 0.0833% of the company, were available to him at $0.27/share, or $4,050 total. So he had the opportunity to buy 0.0833% of the company at a $4.8MM valuation. Given that they recently raised $20MM at an undefined valuation it really says something that he chose not to exercise the options. I normally don't comment on HN without having read TFA, but this one is way too long and I just skimmed over it…

A $20MM raise suggests a $100M valuation or so. That's a 20x increase in the stock price. OP's outlay would be something like $4000 + $35000 (state tax + short term capital gains. Less depending on how he hits AMT.). I don't think that's trivial, even if I'm off by a factor of 2.

OP mentions that he received NSOs, not ISOs, so he would not be subject to AMT. He also wouldn't be taxed at capital gains rates on exercise but rather the spread would be taxed as regular compensation income. More info is available here: https://www.nceo.org/articles/stock-options-alternative-mini...

Re: Why I will not exercise my GitLab stock options

#175

Post by whazor »

barrkel wrote: post #68
mixologic wrote: post #9

I didnt really see anything here of any real substance, other than OP strangely thinks that twitter is private, and that the CEO rightly advised him to link to their own product instead of their competitors. I cant really see how thats a "run in" with the CEO. All the other cultural issues he seems to bemoaning are all consequences of growth in a startup. Information flow gets harder with more people. As far as the C…

CEO rightly advised I don't think it's right at all. What gives him that right? Why is it morally wrong to do otherwise? What kind of right are you talking about?

There is nothing illegal about giving a comment on someone's public tweet.

Re: Why I will not exercise my GitLab stock options

#176

Post by pronik »

Everhusk wrote: post #31
zeveb wrote: post #7

Earlier quoted context omitted.

> Damn, that email from the CEO about his private Twitter. That's completely out of line. It regarded his professional work on GitLab: https://twitter.com/suprnova32/status/720396175954698240 I think it's completely appropriate that he link instead to GitLab for such a thing, and I think it's remarkable that he didn't think the same. This isn't like the ad world, where if your customer is Coke you can't be seen drink…

Why is GitLab even using Github? https://github.com/gitlabhq

Automated builds with Docker Hub as one of the reasons, IIRC.

Re: Why I will not exercise my GitLab stock options

#177

Post by rvschuilenburg »

brianwawok wrote: post #34
jbverschoor wrote: post #11

You should be protected by the dutch law. If you are an employee, you basically cannot be fired if you didn't do anything outrageous.

I cannot imagine running a business with those rules

Although someone else already commented that he's a contractor and not an employee, I still wanted to explain this a bit more.

To me, the most outrageous part was this:

> The cherry on top of this disastrous situation was that throughout the entire process I only heard good things from my manager. In total I had 3 1-on-1's with him, and even though we discussed the situation and what was wrong multiple times, he never, for one moment, gave me the impression that my job could be in jeopardy. A few weeks later I was fired.

I'm not a lawyer, but there's no way that would be acceptable under Dutch law (if he was an employee).

You can definitely fire someone if hey are not performing. But you'd at least need to warn them about their performance, and allow them time to improve.

Re: Why I will not exercise my GitLab stock options

#178

Post by vladimirralev »

smm2000 wrote: post #153
vladimirralev wrote: post #93

Earlier quoted context omitted.

I doubt it. The guy got screwed over big time and he doesn't even fully realize it. Apparently he was working against himself for more than a year. They delayed the grant and the vesting date. Perhaps even gave him strike price with his own projected value calculated in the strike price. The whole point of the stock options is to get a strike price without your own value in there. Also it's likely there was dilution…

He was not screwed. He was contractor and contractors typically do not get any options at all. After one year, GitLab offered him options as an incentive or bonus with standard four year vesting - similar to how big companies award you stock options/RSUs annually.

Well, he is under the impression he was a 9th employee and the grant was delayed. So if this is a bonus for time served then it wasn't made clear to him what's his standing. It doesn't even make sense to award options at that point unless they are backdated maybe [1]. And I am willing to bet money that the nature of the options was misrepresented. Foreign contractors are particularly vulnerable since they wouldn't have experience with US law and finance.

I don't know of any companies that award options yearly/bonus, it would be an incredibly stupid thing to do, must always do RSUs [1]. Options may be adjusted for dilution or promotions yearly, but that's different. Options are designed as a tool to get a % proportional to what you add as value. If you get options with your own work valued in the strike price, those options are orders of magnitude less valuable than the options you get at sign up. If gitlab made that clear and he agreed, then I agree gitlab are in the right, otherwise yes he got screwed over big time.

[1] The problem with delayed or yearly options grants is that workers have a huge incentive now to lower the strike price for the next valuation. Why would you work hard against yourself if you are really just increasing the price you buy at? You'd be much better off to work against the company at this point and score a lower strike price. Further how can you trust a company that makes you work against your own interest. Perfect example of lose-lose.

Re: Why I will not exercise my GitLab stock options

#179

Post by YorickPeterse »

jbverschoor wrote: post #11

You should be protected by the dutch law. If you are an employee, you basically cannot be fired if you didn't do anything outrageous.

This is not the case. When firing somebody there are two options you have as an employer:

1. Fire them the usual way, in this case there is a termination period (usually 1 month).

2. Fire them on the spot. This is possible, but usually only done if an employee violated a contract agreement, harassed somebody, or basically committed some kind of serious offence.

This only applies to those employed in The Netherlands, other countries may have other rules.

More information: https://www.rijksoverheid.nl/onderwerpen/ontslag/vraag-en-an...

Re: Why I will not exercise my GitLab stock options

#180

Post by lima »

chetanahuja wrote: post #46
lima wrote: post #4

Earlier quoted context omitted.

Make sure you look at Phabricator, too. It's great and the dev team is highly professional. Has a Trello-like work board, good project management and - most importantly - a sane and highly optimized workflow that works very well for a number of large companies and open source projects. I'll just link to another comment of mine: https://news.ycombinator.com/item?id=13939608 Happy to answer any questions! (give it a fe…

One of the biggest weaknesses of gitlab, that becomes glaring as you add more and more projects, is that a code repository and a project are considered one and the same thing. It's quite common to want two or more separate repositories for an actual development project (e.g. frontend/backend or client/server etc.). Of course gitlab's problems arise from the fact that their whole reason for existence is being an open-…

Yes, that's exactly how Phabricator works.

Issues, project management and repositories are fully decoupled.

Instead of copying GitHub with all its flaws, Phabricator was built from scratch for the enterprise usecase.

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