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Ask HN: Former employees' RSUs at risk after startup's IPO

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Re: Ask HN: Former employees' RSUs at risk after startup's IPO

#81

Post by choppaface »

vessenes wrote: post #74

I read down pretty far and did not see this basic advice: you need a lawyer. Hire a very good one: they are cheaper than poor lawyers by an order of magnitude. That lawyer will review your agreements, the state laws and the communications with the company and tell you where you’re at. You could all go in together for the lawyer btw if you have the same contract. I bet that lawyer will tell you (if this is in Californ…

And/or try contacting a bank (one of the underwriters?) to see if they’ll loan you cash for taxes using the RSUs as collateral. A lot of early Uber employees were able to get loans to exercise and cover taxes, tho these were rather large sums. That said the shares are liquid so less risk.

Re: Ask HN: Former employees' RSUs at risk after startup's IPO

#82

Post by greenspam »

arkadiyt wrote: post #73
AbstractH24 wrote: post #70

Can someone just name the company, cause there is enfough information here that it’s not hard to figure out.

185 days before 3/15/2025 is 9/11/2024. There were these IPOs around that time (all Nasdaq) [1]: - 9/10: TDTH - 9/10: XCH - 9/12: GLXG - 9/12: FVN [1]: https://stockanalysis.com/ipos/2024/

It's not those companies. There is a typo in the original post. 3/15 is before 185 days.

Re: Ask HN: Former employees' RSUs at risk after startup's IPO

#83

Post by fragmede »

greenspam wrote: post #79
DannyBee wrote: post #62

A few things - First, What's your end goal here? Is it to not forfeit the RSU's? Is it to not pay the taxes upfront? etc You ask a lot of "is this normal questions", but it sort of doesn't matter if it's normal if you want something else. Maybe the answers affect the chances of getting that something else, but it's really hard to give advice without knowing what you actually want to achieve. It will quickly become a…

The best case is to not pay the taxes upfront. Say the company wants me to pay 50% tax in cash and then give me 100% of my vested RSU; I want 50% of my vested RSU without needing to pay taxes. Yes, we are contacting lawyers. Thanks for your attention!

That's not necessarily the case. You might not want to put up money to cover taxes, but that's not advantageous in all situations, so echoing everyone else's advice here: talk in depth with a professional who's time you pay for.

Re: Ask HN: Former employees' RSUs at risk after startup's IPO

#84

Post by fragmede »

deanmoriarty wrote: post #56

This is sad and surprising. I’ve been through so many shenanigans during my previous life as a naive startup employee: paid huge amounts of AMT (which took years to recoup via AMT credits), was not offered 83b election, had to write huge checks to exercise ISO, had to pay taxes when exercising NSO, etc., but I had never heard of a company threatening to forfeit the RSU if tax is not wired to them, it’s simply wild, e…

Only $4k?

Re: Ask HN: Former employees' RSUs at risk after startup's IPO

#85

Post by fragmede »

danielmarkbruce wrote: post #14
hansonkd wrote: post #6

> We are curious if this type of distinction between current and former employees is typical for post-IPO RSU settlements. I'm watching this thread, but just as a reminder that it benefits the company to be as vague and complicated as possible for ex-employees trying to exercise their equity rights. You and your equity are effectively dead weight to the company now and it's in their best interest to get you to forfei…

This is cynical and more frequently wrong that right. In most cases, the company is trying to avoid securities regulation screw ups, tax screw ups, other regulatory or legal screw ups. Sometimes they are overly conservative and it seems annoying, but that's what they are doing. As an example, Stripe went out of their way to get former employees paid.

It was noteworthy that Stripe did that. The fact that it was unusual should speak to which behavior is more common by companies.

Re: Ask HN: Former employees' RSUs at risk after startup's IPO

#86

Post by fragmede »

danielmarkbruce wrote: post #25
JumpCrisscross wrote: post #19

Earlier quoted context omitted.

Borrow against the RSUs. If you have more than $500k, this should be trivial to privately arrange. (If less, idk. Also, not legal advice!)

yeah i was going to suggest the same... there are companies that do this, and honestly anyone with a little cash will lend you the money assuming the stock isn't a totally ridiculous thing. How are the RSUs managed? Are they in a brokerage account? You may well be able to borrow from the broker.

And the important thing to note about those companies is that 100% of $0 is $0. X0% of a big number is still a big number, and still bigger than $0.

Re: Ask HN: Former employees' RSUs at risk after startup's IPO

#87

Post by fragmede »

JumpCrisscross wrote: post #53
danielmarkbruce wrote: post #24

Earlier quoted context omitted.

Yes, it covers them. Hence it's not orthogonal. The fact that there are two agreements doesn't make them orthogonal. Many situations are covered by more than one contract (or law or regulation).

You’re being intentionally obtuse. The source of the problem isn’t the lock-up agreement, which was negotiated independently of the RSUs. And the lock-up agreement is easily (and commonly) circumvented—the problem is intractable because it’s unrelated to the lock-up. (And pedantically, a 185-day lock-up is not common.)

Ehhh 180 days is 6 months is fairly standard.

Re: Ask HN: Former employees' RSUs at risk after startup's IPO

#88

Post by aorloff »

I hate this shit because you are inevitably in the worst possible position in terms of not only power, but information. But ultimately your shares are not worthless, so this must be a positive thing, and I keep a small portfolio of worthless company shares on the wall to remind me.

1. Unfortunately yes I have heard of this. It sucks and if they don't allow you to sell to cover you should be able to find a lender - I would start by going to a brokerage and talking to your broker. I would imagine if you purchased a short position (a PUT option to sell the same number of shares you will be owning) then you can convince them with enough documentation and maybe some kind of escrow or custodial account to effect it.

2. Then you need a lawyer and a brokerage.

3. An accountant, lawyer and brokerage. Again, this is the good scenario (shares are not worthless)

4. Since you said it was public, try your brokerage first. There are options for private companies in this space as well. There are definitely lenders who will help you out here.

If you just wanted to get the whole thing over with I would find someone willing to lend the money against the shares, again if this is a publicly listed security and you can purchase the PUTs then your brokerage should be able to loan against the shares to pay the taxes, you escrow the shares and they loan the money and then shares go into escrow and you have the PUT options so you can treat those shares as cash with your brokerage.

Re: Ask HN: Former employees' RSUs at risk after startup's IPO

#89

Post by breakds »

deanmoriarty wrote: post #56

This is sad and surprising. I’ve been through so many shenanigans during my previous life as a naive startup employee: paid huge amounts of AMT (which took years to recoup via AMT credits), was not offered 83b election, had to write huge checks to exercise ISO, had to pay taxes when exercising NSO, etc., but I had never heard of a company threatening to forfeit the RSU if tax is not wired to them, it’s simply wild, e…

I am sorry that you had to go through such shenanigans. Consulting a lawyer is also what we are working on right now. Asking just in case: do you have any lawyer to recommend? Thanks!

Re: Ask HN: Former employees' RSUs at risk after startup's IPO

#90

Post by flomo »

rootsudo wrote: post #52
danielmarkbruce wrote: post #14

Earlier quoted context omitted.

This is cynical and more frequently wrong that right. In most cases, the company is trying to avoid securities regulation screw ups, tax screw ups, other regulatory or legal screw ups. Sometimes they are overly conservative and it seems annoying, but that's what they are doing. As an example, Stripe went out of their way to get former employees paid.

100% disagree. Just because one company goes out of the way for PR good will does not many many other companies will. Many companies do not care about you once you are a departed employee. For example, see how easy it is to get your bi weekly paycheck copies. Most will not reply at all.

Wow, check stubs used to be the basic social currency around renting and etc. Are you saying people can't get these anymore? Or maybe they know too much and don't care?
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