If you have startup stock options, check your option plan
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If you have startup stock options, check your option plan
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Re: If you have startup stock options, check your option plan
#2Ideally before you accept the offer :)
Re: If you have startup stock options, check your option plan
#3[deleted]
Re: If you have startup stock options, check your option plan
#4Ideally before you accept the offer :)
True, but in the current hiring climate and if you're still at an early stage you should definitely still have leverage.
Re: If you have startup stock options, check your option plan
#5Another thing to understand (and this will sound obvious to many of you) is that your options may be worth nothing, even after a multi-million dollar acquisition if there are priority stock holders (the investors) ahead of you in line.
As a young and naive engineer I learned of this fact the day the first startup I worked for was acquired. First I read the big number that was to be paid for the company, was ecstatic, and immediately starting doing "x-million times half a percent" in my head followed by a sinking feeling as I read the clause stating that common stock holders would get $0.
In retrospect it sounds obvious that if the company sells for less than the money the investors put in, your x percent is worth nothing. But it's easy to get carried away thinking you actually own a percent of the company, and that a sale means a pay day for you. Don't let the first word of acquisition get you too excited, the come down sucks.
Re: If you have startup stock options, check your option plan
#6Do you know what I call a 1%/4-year vestment "equity" plan? I call that an ESPP (employee stock purchase plan) by another name, with inflated valuations due to startup hype.
Why would anybody agree to that? At least insist the first half percent vest proportionally over the first year with each paycheck.
Re: If you have startup stock options, check your option plan
#7"But note this doesn’t mean everything will be perfect. If the acquirer decides that you are no longer needed, they could keep your option agreement intact and terminate your employment. You wouldn’t get any further vesting unless you have single-trigger or double-trigger acceleration, and you’d be out of a job. It would be the same as if you’d been fired by your company before the acquisition."
Maybe I'm reading this incorrectly, but if you don't have single-trigger or double-trigger acceleration, the employer has all the leverage they need to renegotiate your (incentive) contract.
Re: If you have startup stock options, check your option plan
#8"But note this doesn’t mean everything will be perfect. If the acquirer decides that you are no longer needed, they could keep your option agreement intact and terminate your employment. You wouldn’t get any further vesting unless you have single-trigger or double-trigger acceleration, and you’d be out of a job. It would be the same as if you’d been fired by your company before the acquisition." Maybe I'm reading thi…
(without knowing anything about this stuff) it sounds like the difference is that they must fire you if they don't continue your "award" or give it all to you immediately. This takes away the possibility of bluffing on your part / calling your bluff.
You can honestly say, "sorry, not my decision, I can't stay if I don't get all my options (now or on schedule)". That could be a somewhat stronger negotiating position.
Re: If you have startup stock options, check your option plan
#9Why worry about stock options at all? There is a spectrum of outcomes. On one end the startup flops, or is bought for so little that your share, even if paid out, is close to 0. On the other end you have Google, Facebook, Instagram, etc. Companies where 0.5% is worth quite a bit of money. The problem is that the majority fall in-between, where your stock options will be worth nothing, yet the company will sell for a decent amount of money.
So what you should do is value the stock options at 0. If you have the spare cash, buy them as early as you can, but don't count them for anything. They are a lottery ticket that your company is the next Google and like any lottery ticket they are likely worth nothing. If the startup is offering to pay you half of what you'd make elsewhere, waving stock options at you telling you they'll make you rich, consider if they just handed you a pile of lottery tickets and half a paycheck. If you'd still take it (maybe you really like the people, or want to work in this field), go for it. Otherwise, they are just trying to get your for a far cheaper price than you'd get elsewhere.
Re: If you have startup stock options, check your option plan
#10"But note this doesn’t mean everything will be perfect. If the acquirer decides that you are no longer needed, they could keep your option agreement intact and terminate your employment. You wouldn’t get any further vesting unless you have single-trigger or double-trigger acceleration, and you’d be out of a job. It would be the same as if you’d been fired by your company before the acquisition." Maybe I'm reading thi…
You're right. That's true the before the acquisition and after. Your employer can say you have to accept a reduced package or get fired.
The difference is the starting point of the negotiation. If the acquirer wants to keep you, the "right" language in the option plan means the starting point is your original comp package. You have to explicitly agree to a reduced package for it to change. If you have the "wrong" language, there is simply no deal in place to start the negotiation.