What do you think of this equity offer?

#1

Post by throwawyxyz » Tue, Apr 10, 2012, 11:22 PM UTC

I was offered 20,000 options at a strike price of $3.14 on a total share base of about 75 million (probably about 0.025%). As far as I can gather the company is valued at around $175MM, and they have a few hundred employees. I would be going in as a Senior Engineer (4 years experience).

Base pay would be around $115K.

Re: What do you think of this equity offer?

#2

Post by damoncali » Wed, Apr 11, 2012, 1:00 AM UTC

Don't know about the offer, but do you have $62,800 laying around to exercise the options should it come to that? Make sure it makes sense from a cash flow and tax point of view.

Re: What do you think of this equity offer?

#3

Post by debacle » Wed, Apr 11, 2012, 1:39 AM UTC

Base pay sounds very reasonable for a senior engineering position. The options sound like icing.

Re: What do you think of this equity offer?

#4

Post by tanitall » Wed, Apr 11, 2012, 2:03 AM UTC

not familiar, but I assume the company is public and there is a period of time needed before being vested?

Re: What do you think of this equity offer?

#5

Post by jaxn » Wed, Apr 11, 2012, 2:14 AM UTC

75mm shares at a 175mm valuation means a share price of $2.33. Shouldn't the strike price be at the current valuation?

Re: What do you think of this equity offer?

#6

Post by codeonfire » Wed, Apr 11, 2012, 9:51 AM UTC

You are missing some information needed to value these options. You need the vesting period, expiration, some measure of volatility, rate of return.

I really don't understand why companies do these tiny option plans. No one is going to kill themselves working nights and weekends just so they can buy a new car or something in ten years. Does it really matter if the value is $50k or $150k? You want a plan to become a major holder in a successful business. 20k options are wonderful if all you ever see yourself as for the next ten years is a rank and file employee. Personally, I would just ignore it and find some start-up partners. It's table scraps. Its like the owners saying "if you help us make hundreds of millions of dollars, we'll maybe help you pay off your crappy condo"

Re: What do you think of this equity offer?

#7

Post by thejteam » Thu, Apr 12, 2012, 2:44 AM UTC

Mind if I ask where you are located and what you are doing? I know job titles are meaningless but where does it only take 4 years experience to be a senior engineer and earn 115K? I have 10 years and I'm still a few years away from being considered a senior engineer. I'm not in California, but DC area doesn't exactly have the lowest cost of living either and I don't make 115K.

Re: What do you think of this equity offer?

#8

Post by caw » Thu, Apr 12, 2012, 2:55 AM UTC

thejteam wrote: post #7

Mind if I ask where you are located and what you are doing? I know job titles are meaningless but where does it only take 4 years experience to be a senior engineer and earn 115K? I have 10 years and I'm still a few years away from being considered a senior engineer. I'm not in California, but DC area doesn't exactly have the lowest cost of living either and I don't make 115K.

I agree. "A few hundred employees" and the average amount of time to be considered a senior engineer is only 4 years? That's either a title for title's sake, or the actual engineering department is all of 10 people.

Re: What do you think of this equity offer?

#9

Post by _delirium » Thu, Apr 12, 2012, 4:19 PM UTC

damoncali wrote: post #2

Don't know about the offer, but do you have $62,800 laying around to exercise the options should it come to that? Make sure it makes sense from a cash flow and tax point of view.

On the cash-on-hand point, many brokers won't require you to actually front the cash, and will instead let you pay for the exercise cost out of immediate proceeds of selling the resulting shares, as one netted-out transaction. For example, here's Fidelity's info: http://personal.fidelity.com/products/stockoptions/exercise....

Re: What do you think of this equity offer?

#10

Post by djb_hackernews » Fri, Apr 13, 2012, 1:17 AM UTC

thejteam wrote: post #7

Mind if I ask where you are located and what you are doing? I know job titles are meaningless but where does it only take 4 years experience to be a senior engineer and earn 115K? I have 10 years and I'm still a few years away from being considered a senior engineer. I'm not in California, but DC area doesn't exactly have the lowest cost of living either and I don't make 115K.

Every place I've been you make senior engineer by your 3rd year. It usually looks something like I->II->Senior->Principal->Senior Principal->Architect for purely technical roles.

I live in DC and I can tell you, if you have 10 years experience, and you aren't at least senior and/or you don't make 115k, something is VERY wrong.