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Palantir Buyback Plan Shows Need for New Silicon Valley Pay System

nytimes.com

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Re: Palantir Buyback Plan Shows Need for New Silicon Valley Pay System

#101

Post by bane »

ryporter wrote: post #71
bane wrote: post #9

This sounds like a company in big trouble and trying desperately to stem attrition and improve tanking morale. According to crunchbase they're basically owned by a private equity firm now (which is rarely a fun place to be) and are raising something like a billion dollars a year -- which basically appears to be around what their operating costs are (employee count of that year * $250k/yr). They're either not bringing…

They are not "basically owned" by a private equity firm. They have raised money at high valuations, and I strongly doubt that they have sold away a controlling stake in the company. So, they still get to make their own decisions. They are definitely bringing in real revenue. Many firms have raised substantially more than they need to, because they have been well aware that funding could dry up.

They've raised more money under private equity than all the rest of the rounds combined x 5. The last round, by a private equity firm, was almost the size of all other raises combined.

They've raised 15 rounds that are publicly known. Every single raise since Sep 2013 has been under private equity. This sounds more like the company is being sold on the private market and each new owner is putting in a year's worth of cash infusion for operating costs.

Are those fund raising rounds? I dunno. But it's one of the weirdest fund raising profiles I've ever seen.

Re: Palantir Buyback Plan Shows Need for New Silicon Valley Pay System

#103

Post by trungonnews »

harryh wrote: post #80
trungonnews wrote: post #38

Earlier quoted context omitted.

What happen if the company goes bankrupt? What happen to the prepaid taxes on the ISO spread?

You get a credit that you can use to offset your taxes in future years.

Is it a capital gain credit? One with $3000/year deduction cap? If so, it can take a couple life times to fully redeem the prepaid tax credit.

Re: Palantir Buyback Plan Shows Need for New Silicon Valley Pay System

#104

Post by cbsmith »

argonaut wrote: post #52
cbsmith wrote: post #48

Earlier quoted context omitted.

> you are free to sell on the private markets for less than what Palantir offers you Perhaps you are more aware of the terms on those shares than the rest of us, but generally you aren't quite "free" to sell the shares on the private market.

Read the article more carefully: "Palantir did not impose restrictions on employees or stockholders selling shares in the private market."

I did miss that detail. Sorry.

Re: Palantir Buyback Plan Shows Need for New Silicon Valley Pay System

#105

Post by cbsmith »

ryporter wrote: post #72
cbsmith wrote: post #48

Earlier quoted context omitted.

> you are free to sell on the private markets for less than what Palantir offers you Perhaps you are more aware of the terms on those shares than the rest of us, but generally you aren't quite "free" to sell the shares on the private market.

Many former employees have done exactly this.

Many have, but the way the stock agreements are structured, it effectively gives them a pocket veto on stock sales, which impacts the value that an employee can get for them.

Re: Palantir Buyback Plan Shows Need for New Silicon Valley Pay System

#106

Post by [deleted] »

trungonnews wrote: post #103
harryh wrote: post #80

Earlier quoted context omitted.

You get a credit that you can use to offset your taxes in future years.

Is it a capital gain credit? One with $3000/year deduction cap? If so, it can take a couple life times to fully redeem the prepaid tax credit.

[deleted]

Re: Palantir Buyback Plan Shows Need for New Silicon Valley Pay System

#107

Post by [deleted] »

trungonnews wrote: post #103
harryh wrote: post #80

Earlier quoted context omitted.

You get a credit that you can use to offset your taxes in future years.

Is it a capital gain credit? One with $3000/year deduction cap? If so, it can take a couple life times to fully redeem the prepaid tax credit.

[deleted]

Re: Palantir Buyback Plan Shows Need for New Silicon Valley Pay System

#108

Post by harryh »

trungonnews wrote: post #103
harryh wrote: post #80

Earlier quoted context omitted.

You get a credit that you can use to offset your taxes in future years.

Is it a capital gain credit? One with $3000/year deduction cap? If so, it can take a couple life times to fully redeem the prepaid tax credit.

Yes it's a capital loss. Which means you can use it to offset an unlimited amount of capital gains, but only 3k of ordinary income. So how long it takes to redeem could be a long time if you never incur capital gains.

Re: Palantir Buyback Plan Shows Need for New Silicon Valley Pay System

#109

Post by x0x0 »

Mtinie wrote: post #76
coldcode wrote: post #74

Exercising options in a non-public company should not be taxed or valued in any way until the stock can be sold in a public market or to a purchasing entity. Of course what are the odds Congress would ever do that? Nil.

Can't this be mitigated to a large degree by setting the value per share to an tiny fraction of a dollar? Sure, you'll have a tax to pay when the shares are granted, but it should be reasonable. I could get behind the scheme you commented with, but I'm unsure of generally why we have the system we currently do, so I would want to understand the rationale for the status quo.

In my understanding, there's huge tax penalties, both to employer and employee, for giving employees in the money options. Thus options have to be granted with a strike that is fmv or something approximating it. Excessively sandbagging the valuation would, I think, be consider doing the above.

Further, you don't think businesses are averse to golden handcuffs, do you?

Re: Palantir Buyback Plan Shows Need for New Silicon Valley Pay System

#110

Post by lmm »

mandevil wrote: post #91
lmm wrote: post #58

Earlier quoted context omitted.

Feels like there should be some kind of "shotgun clause" equivalent. The government wants to value your illiquid asset at $x for tax purposes? Fine, but if you disagree with that valuation you get a corresponding right to sell that asset to the government for 90% of $x and make it their problem.

What on earth would the government do with a stake in a privately held company? Buy and hold investment? How would they use the voting power?

They could buy and hold - the government has a long time horizon. Or they could auction it off. They could abstain from votes, or they could do something more complicated.
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