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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

#41

Post by dredmorbius »

codys wrote: post #8

Palantir's official reason of "improving employee moral" doesn't seem to really mesh with the conditions they are imposing on the buy-back: > [...] employees who sell their shares agree agree that they will not compete with Palantir for 12 months or solicit any Palantir employees during that time [...] [and] agree to a nondisclosure arrangement that forbids them from even talking about the repurchase and waive any cl…

YC venture concept: generate automated press inquiries directed at employees of firms with such policies.

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

#42

Post by kriro »

How does the non compete and soliciting work for ex-employees. Is it 12 month after they left (likely void/expired for some already) or 12 month after signing in which case some ex-employees probably can't even sign this.

Either way I'm very skeptical of anything involving NDAs or non competes. I can understand a non poaching clause (but am also opposed to that on ideological grounds). If I could afford it I wouldn't sign anything that has NDAs or non disclosure.

I also doubt that many of the ex-employees need liquidity as they are likely to hold well paying jobs. I suppose some could need it but those are probably exactly the people least likely to compete with Palantir.

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

#43

Post by jonathankoren »

gonehome wrote: post #37
jonathankoren wrote: post #34

Earlier quoted context omitted.

Yeah, the ISO spread with the AMT is bullshit that basically keeps the plebes in their place by not actually letting them get any windfall. However it seems like the real problem is exercising post-IPO. In the post-IPO world, you're dealing with say a 5x to 10x spread, possibly even more. In the pre-IPO world, your spread is probably 2x at most, which is much more manageable. One clarification with what you said, is…

Thanks for the clarification about post exercise selling of shares (that you're taxed on the difference between exercise price and sale price). I agree the argument that you make money on exercise doesn't make sense - especially since the company could easily crash afterwards and you can still get stuck with a huge tax bill for value you never actually realized (except on paper). Agreed you won't get full value, but…

One of the problems with an 83b is that your company might not allow early exercise.

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

#44

Post by stale2002 »

freditup wrote: post #36
stale2002 wrote: post #32

Earlier quoted context omitted.

Yeah, CMU grad here. My impression of Palantir is that they hire the top 1% of developers and pay them what a 50 percentile developer would make. If you ever get a palantir job offer, you'd be better off just forwarding it to Uber, or Google or FB, and waiting for them to give you a 50% increased counteroffer on the spot.

Curious what your estimate of a 50th and a 99th percentile developer salary is for a new grad? And do you mean a 50th percentile CMU grad, or a 50th percentile CMU grad developer, or just overall?

Perhaps I exaggerate with the 99 percentile number, but the people I know who work at a top(high paying) company like Uber or Jane Street will get something like 150k easy (and maybe a signing bonus), and Palantir is more middle of the road with 100k base salary or less, and stock options of dubious value.

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

#45

Post by abcampbell »

pm90 wrote: post #40
gonehome wrote: post #33

Earlier quoted context omitted.

Just because a company isn't public doesn't make it a 'dark market' (not sure what that is). The 409A valuations are real and there are rules surrounding how exercise happens. You can't just sell them outside of that and not pay taxes. You could theoretically sell the shares once exercised to some other private investor if you can find one, but you'd still have to follow the same exercise rules.

Would this information be public? Sounds like it would be easy to get an idea of what a stock is worth in the private market from this data.

Yes, if you had the data.

That's why shares that trade openly are called 'public market' shares.

Reading this thread is fun, it's like trying to see Silicon Valley try to reverse engineer something hiding in plain site.

95% of these problems would go away if these companies were forced (by investors or employees) to go public.

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

#46

Post by abalone »

This is called a PLP (Private Liquidity Plan). The comments here are kind of vaguely negative but it's actually not a bad deal for employees. The main problem is that most pre-IPO companies can't afford it. It uses up capital that would otherwise go into operations.[1]

Where it may make sense is in so-called "private IPOs", i.e. those 9 or 10 digit dollar rounds. There's enough money there to hand out. In olden days, companies would have been public by then and employees would have had liquidity. Planatir raised $880M last year so, yeah, they can afford it.[2]

[1] http://venturebeat.com/2012/09/30/need-to-cash-out-a-bit-pre...

[2] https://techcrunch.com/2015/12/23/palantir-has-raised-880-mi...

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

#47

Post by encoderer »

jonathankoren wrote: post #34
gonehome wrote: post #19

Comments on this thread are not very interesting and generally off topic. This article points out an issue in SV which is that it's hard for employees to get value out of options held in companies that do not go public. One reason for this not mentioned in the article is that in the US the tax burden is extreme - partially because when it was implemented it expected companies to go public. If you hold options in a pr…

Yeah, the ISO spread with the AMT is bullshit that basically keeps the plebes in their place by not actually letting them get any windfall. However it seems like the real problem is exercising post-IPO. In the post-IPO world, you're dealing with say a 5x to 10x spread, possibly even more. In the pre-IPO world, your spread is probably 2x at most, which is much more manageable. One clarification with what you said, is…

I don't care to nit pick but it's not quite that simple. The AMT credit you receive at exercise can in theory be used to offset the tax due at sale, but you can only claim amt credit if your traditional tax liability is higher than your amt liability that year. While that may be true if you sell a lot of stock it's not a lock esp in California where a working married couple with a home can have a lot of high dollar deductions. In that case you keep the credits until you can use them.

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

#48

Post by cbsmith »

argonaut wrote: post #23
codys wrote: post #8

Palantir's official reason of "improving employee moral" doesn't seem to really mesh with the conditions they are imposing on the buy-back: > [...] employees who sell their shares agree agree that they will not compete with Palantir for 12 months or solicit any Palantir employees during that time [...] [and] agree to a nondisclosure arrangement that forbids them from even talking about the repurchase and waive any cl…

Given that the buyback price is above market price , I don't see a problem with this. Palantir is compensating you for signing a noncompete/NDA. If you don't want to sign those things, you are free to sell on the private markets for less than what Palantir offers you.

> 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.

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

#49

Post by spacecowboy_lon »

jonathankoren wrote: post #34
gonehome wrote: post #19

Comments on this thread are not very interesting and generally off topic. This article points out an issue in SV which is that it's hard for employees to get value out of options held in companies that do not go public. One reason for this not mentioned in the article is that in the US the tax burden is extreme - partially because when it was implemented it expected companies to go public. If you hold options in a pr…

Yeah, the ISO spread with the AMT is bullshit that basically keeps the plebes in their place by not actually letting them get any windfall. However it seems like the real problem is exercising post-IPO. In the post-IPO world, you're dealing with say a 5x to 10x spread, possibly even more. In the pre-IPO world, your spread is probably 2x at most, which is much more manageable. One clarification with what you said, is…

Amen I remember that when I had shares in o2 from a employee scheme. The company did an exercise in buying out small shareholders for around 50p - Less than a year later the sahres got brought by telephonica for £2.0

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

#50

Post by spacecowboy_lon »

vonklaus wrote: post #7

I can't find the source so this is from memory; but Karp or Theil said they wouldn't ever go public and essentially can't because they are essentially a DoD contractor. While other companies notably do similar things and other contractors are public, Palantir provides a unique platform to some extent and their customer base, much of their technology and operations are secret. It is known they will not likely go publi…

BAE,BT and qinetiq are quoted and do work for the MOD and DOD - if its such sensitive work then they would be crown servants (or what ever the equivalent is for the USA)
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