We need to rethink employee compensation • Hacker News Board

Re: We need to rethink employee compensation

#411

Post by vishvananda » Sat, Jun 27, 2015, 4:20 PM UTC

areyousure wrote: post #347

vishvananda wrote: post #322

Earlier quoted context omitted.

Actually your taxable income in the second case is less because you made less money. :)

How can you make less money by exercising the same options, but at a different time?

when you declare your income you subtract your cost basis from the sale price. In 1 you paid $10 and sold for $100 = $90 profit you have to pay taxes on. In 2 you paid $35 and sold for $100 = $65 profit. It isn't the time at which you exercise that makes the difference, it is the higher strike price.

EDIT: to be clear, 1 and 2 refer to the original differences in the first post. If we are comparing different exercise time with the same strike price, then the taxes are nominally the same (Because the income tax % you pay depends on your income, you might be able to save money by exercising in a year when your income is low).

Re: We need to rethink employee compensation

#412

Post by dllthomas » Sun, Jun 28, 2015, 7:24 PM UTC

areyousure wrote: post #347

vishvananda wrote: post #322

Earlier quoted context omitted.

Actually your taxable income in the second case is less because you made less money. :)

How can you make less money by exercising the same options, but at a different time?

The answer is that they're not the same options. Your respondents are assuming the strike price is FMV at the time the options are issued, which will be different at different times. There may be good reason for that assumption, if it's somehow prohibited to later issue options based on an earlier FMV, but it should have been called out because it's changing more things than just what you'd intended to ask about.

Re: We need to rethink employee compensation

#413

Post by arbitrage314 » Mon, Jun 29, 2015, 12:01 AM UTC

billmalarky wrote: post #409

arbitrage314 wrote: post #406

Earlier quoted context omitted.

Although it's sometimes a bit of work to find these opportunities, there are enough people with good ideas who need money these days. Friend of a friend-type stuff. Occasionally, after talking to a startup about a potential employment opportunity, I'll ask if I can simply invest. They are usually flattered that someone would be so excited, and they are usually quite happy to take your money. A final option is to inve…

Wow that's a pretty bold and interesting method. Have you ever tried simply cold emailing? That seems like it could work as well if this works.

I haven't ever tried that, but I'll certainly consider it if I ever feel strongly enough! For early-stage ventures especially, the quality of the people seems to matter a lot. Therefore, there's a high probability I'd know the founders (or at least some employees) before I put in any money, and therefore, cold emailing wouldn't be necessary.