Ah, well, I have seen people who ended up in debt to the tax aithorities because of such deals and schemes.
I would always prefer the cash and be done with it.
Stripe faces $3.5B tax bill as employees' shares expire
241–250 of 396 posts
Re: Stripe faces $3.5B tax bill as employees' shares expire
#242Earlier quoted context omitted.
Yeah, but they would have had to have spent a lot more cash upfront, both in the bonus amounts and the payroll taxes on those amounts. ISOs are pretty ideal for early stage companies because they are very cash efficient and very light on taxes pre-liquidity. They begin to get more complicated when the company has non-negligible value. But they're still alright as long as you don't get to the point where the options a…
While it's true that cover-to-exercise is more cash-intensive, if it's only for the first 50 or so employees, it would seem viable for a company like Stripe that has strong cash flow. The problem with ISOs is they effectively halve the value of the award due to taxes, and furthermore can impose extremely risky tax situations on people who can't afford to lose much (e.g. employees who exercise before IPO). Performance…
> The problem with ISOs is they effectively halve the value of the award due to taxes
Could you explain this?
Re: Stripe faces $3.5B tax bill as employees' shares expire
#243Earlier quoted context omitted.
It's pretty accurate: Employees don't have a few million in change, each, to turn the RSUs into plain stock. I don't think the issue is making employees wealthy or not: It's 10 year old RSUs, so most of them are owned by former employees. But consider the size: If the tax bill is 3.5B, the full size of the grants we are talking about here is over 10B! last valuations in the press are at something like 60b. So 1 in 6…
One thing I've never understood about this: why on earth aren't there financial products specifically for people in this situation? Especially around Silicon Valley? Bankish Corp floats you the tax bill at some mutually beneficial interest rate, and in return gets a signed repayment guarantee for when you can actually cash out?
You mean a loan? I think banks do that ;)
Re: Stripe faces $3.5B tax bill as employees' shares expire
#244Earlier quoted context omitted.
> of working very hard, instead of coasting I work at a FAANG, not coasting and make a lot of money and have made a lot of money every year for nearly a decade. I'll continue to make a lot of money and not worry about whether my startup will or won't succeed.
Some people love that kind of stress though. Like some people like working hard so they can up front all their work and retire earlier. And others like coasting so they can live their 20s before it’s gone. Different strokes.
True, but group A has a 1% (5%?) chance of achieving their goal while group B has a 80% (100%?) chance of achieving theirs.
Always include the odds in these calculations :-)
Re: Stripe faces $3.5B tax bill as employees' shares expire
#245Earlier quoted context omitted.
As a European I feel like both those concepts (big money jobs or big money startups) are a USA only concept. Anywhere else in the world that has those kinds of options? China maybe?
But we get frEe hEaLtHcaRe! And when you factor in the municipal bus network, a $40k salary at Klarna in Stockholm is basically the same as a $350k salary at Stripe in the US. Not to mention in the USA, god knows what cookies might be put into your browser by any random cooking blog, without warning.
> And when you factor in the municipal bus network, a $40k salary at Klarna in Stockholm is basically the same as a $350k salary at Stripe in the US.
Sorry, I'm European but this is just silly.
There's no way $40k in Sweden buys you equivalent quality of life as $350k in the US, even when taking all the welfare state factors into account.
Re: Stripe faces $3.5B tax bill as employees' shares expire
#246Earlier quoted context omitted.
But we get frEe hEaLtHcaRe! And when you factor in the municipal bus network, a $40k salary at Klarna in Stockholm is basically the same as a $350k salary at Stripe in the US. Not to mention in the USA, god knows what cookies might be put into your browser by any random cooking blog, without warning.
You dont have free healthcare. You pay for it like tech employees in the US do and you probably get worse service. At least there is a chance in the US to make generational wealth for a middle class, but no way in hell in Europe.
> You dont have free healthcare
If you’re going to use that sort of reasoning, then you don’t get free anything other than air.
Yes, it’s paid for by taxes (or through insurance depending on country; yes we have cheap private insurance here). Thank you for bringing that to our attention, our feeble European brains were unable to deduce that on our own.
Re: Stripe faces $3.5B tax bill as employees' shares expire
#247Earlier quoted context omitted.
But we get frEe hEaLtHcaRe! And when you factor in the municipal bus network, a $40k salary at Klarna in Stockholm is basically the same as a $350k salary at Stripe in the US. Not to mention in the USA, god knows what cookies might be put into your browser by any random cooking blog, without warning.
You dont have free healthcare. You pay for it like tech employees in the US do and you probably get worse service. At least there is a chance in the US to make generational wealth for a middle class, but no way in hell in Europe.
> You dont have free healthcare. You pay for it like tech employees in the US do and you probably get worse service.
True, but there's no stress due to possible crazy variations in prices, "in network" - "out of network" garbage, etc. When people talk about "free healthcare", what they're really saying is: "out of pocket healthcare expenses are very small and always capped at a decent level, and I have access to healthcare even without a job".
> At least there is a chance in the US to make generational wealth for a middle class, but no way in hell in Europe.
https://www.oecd.org/economy/growth/49849281.pdf
TL;DR: The US has worse social mobility that many equivalent Western European countries.
What the US does is amazing marketing for their big outliers (and amazing marketing for everything, even piles of rocks in a desert, for that matter). I.e. 1 person in 100 million becomes a billionaire and suddenly you'd think 1 in 10 000 people did it :-)
Also:
https://en.wikipedia.org/wiki/Global_Social_Mobility_Index
The US is in 27th spot, after 21 (!) European countries.
Re: Stripe faces $3.5B tax bill as employees' shares expire
#248Earlier quoted context omitted.
I think I misread your comment, so I deleted my earlier one. Sorry. You’re right: if you’re going to work hard, you may as well choose the path with the highest rewards. If Stripe can’t make it worthwhile, is there a good reason to trade away what you’d get at FAANG? So the hard workers have a lucrative path (FAANG), and the ones who want to spend more time away from work have a more lucrative path (BigCo). That does…
As a European I feel like both those concepts (big money jobs or big money startups) are a USA only concept. Anywhere else in the world that has those kinds of options? China maybe?
Remote means anywhere.
Re: Stripe faces $3.5B tax bill as employees' shares expire
#249(Uninvolved growth-stage CFO perspective) The IRS mandates that stock option grants expire after 10 years. My best guess is these early employees are quickly approaching those grants' 10 year mark, and face an exercise or "lose it" situation. If you exercise, you have to pay the gain. For early employees, this could/would be a massive bill -- probably well into the 7-8 digit range for some early hires. Stripe seems t…
>>Stripe and many companies have these transfer "veto right" to make sure they can control their ownership ("cap table") and also to make sure early employees don't get rich before the IPO.
The founders are rich though, right? What a douche move.
Re: Stripe faces $3.5B tax bill as employees' shares expire
#250Earlier quoted context omitted.
But we get frEe hEaLtHcaRe! And when you factor in the municipal bus network, a $40k salary at Klarna in Stockholm is basically the same as a $350k salary at Stripe in the US. Not to mention in the USA, god knows what cookies might be put into your browser by any random cooking blog, without warning.
You dont have free healthcare. You pay for it like tech employees in the US do and you probably get worse service. At least there is a chance in the US to make generational wealth for a middle class, but no way in hell in Europe.
It might interest you to look up income and social mobility rankings. In short, you are much more likely to build generational wealth in the Nordics.