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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

#61

Post by argonaut »

lmm wrote: post #57
argonaut wrote: post #22

Earlier quoted context omitted.

There's a huge tax hit. Giving shares is taxed as ordinary income.

All of these things should be taxed as ordinary income. Companies shouldn't be able to do an end-run around taxation by giving you valuable stuff instead of giving you money directly.

Companies are not doing an "end-run" around taxation by using the tax codes as they are intended to be used when granting stock options.

In fact, I was pointing out that the poster I was replying to's complicated scheme was actually an "end-run" towards paying way too much in taxes.

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

#63

Post by [deleted] »

lmm wrote: post #60
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…

The notion of "realizing" seems like nonsense to me. You get given a piece of paper worth $100, you should get taxed for $100. Whether that piece of paper is a federal reserve note or a stock certificate should be an irrelevance, no?

[deleted]

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

#64

Post by chrisbennet »

lmm wrote: post #60
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…

The notion of "realizing" seems like nonsense to me. You get given a piece of paper worth $100, you should get taxed for $100. Whether that piece of paper is a federal reserve note or a stock certificate should be an irrelevance, no?

Can you buy anything with that piece of paper?

Can you sell it?

If not, it's not really "worth" $100. That's the difference.

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

#65

Post by mjevans »

lmm wrote: post #58
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.

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.

It would be interesting if you could selectively do that, to pay your taxes with the asset valued at that purchase rate.

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

#66

Post by adrianN »

sverige wrote: post #6
birken wrote: post #2

Boy this article is a very friendly interpretation of Scott Kupor's blog post. From NYTimes: > He [Scott Kupor] also suggests a longer period for employees to exercise options after they leave, up to 10 years. That figure is endorsed by Y Combinator in an argument that any lesser period is unfair to employees. Makes it seem like Scott Kupor is on the leading edge of caring about employees, in agreement with YC (which…

Indeed it is. I particularly like the 'no longer contributing to the business' part, as if the work done by the original employees isn't what the current business was built on, at a discounted rate if their stock options are worthless. And as if the stock options were the only reason they're having trouble attracting quality talent. Stock options seem attractive as a form of compensation, since the hope is that you'r…

Yeah, if you want to tie your income to the risks of running a startup, just found one yourself.

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

#68

Post by rplst8 »

lmm wrote: post #57
argonaut wrote: post #22

Earlier quoted context omitted.

There's a huge tax hit. Giving shares is taxed as ordinary income.

All of these things should be taxed as ordinary income. Companies shouldn't be able to do an end-run around taxation by giving you valuable stuff instead of giving you money directly.

> Companies shouldn't be able to do an end-run around taxation by giving you valuable stuff

They already do in the form of health and retirement benefits.

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

#69

Post by mathattack »

soup10 wrote: post #51
_9vpl wrote: post #18

Earlier quoted context omitted.

That's all standard stuff. If I was at a company for 11 years, I'd sure as hell want to cash out. Whether their offer is a good price or not, who knows.

You can only cash out 12.5%. 12 month non-compete for a small cash out is a pretty double edged deal.

For their California employees who wish to stay in California, the non-compete doesn't matter much. They are virtually unenforceable here.

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

#70

Post by ryporter »

pmiller2 wrote: post #11
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…

Anybody who thinks this offer is meant to benefit employees isn't looking much beyond the surface. The fact that it includes a release of claims, a noncompete clause, and an NDA is a solid clue that this move is intended to benefit Palantir and not employees. Edit: forgot noncompete clause.

Why can't both benefit? Palantir merely offered the deal, and employees (and ex-employees) accepted.
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