14 perguntas cruciais sobre opções de compra de ações

Opções binárias.
Valor de inicialização das opções de estoque.
As 14 perguntas cruciais sobre opções de estoque - Wealthfront.
02/04/2018 & # 0183; & # 32; Se você é um empregado em uma inicialização - não um fundador ou um investidor - e sua empresa lhe dá estoque, você provavelmente vai acabar com "estoque comum" e quot ; ou opções sobre estoque comum. O estoque comum pode torná-lo rico se sua empresa for pública ou for comprada a um preço por ação significativamente acima do preço de exercício do seu.
O melhor dos blogs: como valorizar e negociar estoque de inicialização.
Como as opções de estoque podem ajudar a sua colocação em operação Atrair e manter os funcionários para poder avaliar o valor relacionado às opções de compra de ações, 2017 Entrepreneur Media.
Entrevistando para um trabalho de inicialização: como descobrir o quanto.
27/02/2018 & # 0183; & # 32; Depois que suas opções são "adquiridas" (se tornam exercíveis), ele tem a opção de comprar o estoque em 25 centavos por ação, mesmo que o valor da ação tenha aumentado drasticamente. Após quatro anos, todos os 40.000 de suas ações de opção são investidos se ele continuou a trabalhar para o ABC.
5 coisas que você precisa saber sobre opções de estoque - TechRepublic.
Opções ou Restringido Advogado de ações que representa a partida sujeita ao imposto, na medida em que o valor do estoque, no momento em que a opção foi.
Pergunte ao Headhunter: qual é o tipo de estoque inicial?
Startup Employee Stock Options Plans O pool de opções de ações é um pré-requisito para fechar o valor de um contrato de concessão de opções.
Quais são as opções de inicialização das minhas ações? Sete.
Agora, não há dúvida de que 1000 opções em estoque em uma inicialização com ações de 1mm em circulação (0.1%) têm muito mais de vantagem do que 1000 opções de estoque no google (0.000003%). Isso, claro, levanta a pergunta simples: o que eles valem? Eu vou dar-lhe algumas ferramentas que você pode usar para tirar um swag com esse valor.
Opções de stock de inicialização explicadas | O blog de Max Schireson.
As opções de estoque são uma parte comum da oferta de um jovem iniciante. Idealmente, adoça a torta e torna os candidatos mais ansiosos para ver a empresa ter sucesso. Considerando a.
Como as opções de ações do empregado funcionam nas empresas de inicialização.
Eu realmente preciso de um relatório de avaliação de 409A caro para me dizer que meu arranque vale. Esta regulamentação exige que as opções de ações sejam emitidas com uma greve.
Oferecendo patrimônio dos funcionários em sua inicialização: opções de ações.
Em abril de 2018, escrevi uma postagem no blog intitulada The 12 Crucial Questions About Stock Options. Startup Salary & amp; Patrimônio líquido preferencial, as opções têm menos valor.
Alterações na opção de compra inicial - Joe Beninato - Médio.
Como as opções de ações do empregado funcionam nas empresas de inicialização. Se o valor do estoque subir, a opção torna-se valiosa porque o modo como as opções de estoque do empregado funcionam.
A Falta de Opções para (Startup Employees ') Opções.
Uma das coisas que mais me impressionou durante nossas peças recentes nos planos de opções de empregados iniciais é como as coisas que afetam o valor dessas opções não estão bem.
Economia de opção de estoque para funcionários iniciantes.
Estou procurando por um novo emprego e recebi uma oferta pela qual inicialmente recebo 10000 libras de opções de compra de ações. uma inicialização de 2 anos, Value Value Options. 3.
Guia de Novato para Compensação de Inicialização (ou "Stock".
Os funcionários de Startup obtêm opções de compra de ações que o IRS então impõe ao final do ano a diferença entre o valor de mercado justo existente no mercado e.
7 Perguntas comuns sobre as opções de ações do Empregador de Inicialização.
Dissecando a compensação de capital para funcionários iniciantes por Compreender a Compensação de Patrimônio Líquido e o valor do estoque na data da opção.
Como valorizar opções de ações em uma empresa privada.
Estabelecimento de um método de avaliação razoável. Valores das ações da empresa de arranque Artigo 409A Avaliações e opções de ações 409a avaliações e outorgas de opções de ações para.
10 Dicas para lidar com opções de estoque de inicialização - Bplans Blog.
P: Quantas ações devo obter? Não pense em termos de número de ações ou a avaliação de ações quando você se juntar a uma inicialização em estágio inicial. Pense em si mesmo como um atraso.
Avaliando opções de estoque em ofertas de inicialização - O compilador.
& quot; Por exemplo, uma opção de compra de ações concedida a um empregado com um preço de exercício igual ao valor justo de mercado não é tributável para o empregado, & quot; Graffagnini disse. No entanto, uma concessão de estoque real é tributável ao empregado se o empregado não o comprar da empresa. As opções de estoque padrão são conhecidas como opções de estoque de incentivo (ISOs) pelo IRS.
Como valorizar suas opções de estoque de inicialização | Robert Heaton.
Se você está entrevistando para um trabalho em uma inicialização, você pode ser oferecido opções de estoque. Às vezes, as startups oferecem opções de compra em vez de um salário mais alto.
Compreender a compensação de capital e o que significa.
TUTORIAL: Valorizando as opções de ações do empregado. Há um ditado de que a avaliação inicial é mais uma arte do que uma ciência. Há muita verdade para isso.
The Option Pool Shuffle - Venture Hacks.
Há muito medo, incerteza e dúvida quando se trata de opções de estoque, e eu gostaria de tentar esclarecer algumas delas hoje. Como engenheiro, você pode ser mais.
Eu realmente preciso de um relatório de avaliação 409A caro para.
Cash vs. Stock. Equity é o excelente equalizador de compensação em empresas iniciantes - a ponte entre o valor de mercado de um executivo e as restrições de caixa da empresa.
Valorizando opções de estoque para funcionários de inicialização - Hacker Noon.
O que você precisa saber sobre as opções de compra de ações, Avaliação de um start-up, As opiniões expressadas aqui pelos colunistas do Inc são próprias,
Dan Shapiro: Quanto valem as opções de inicialização?
Todo empresário precisa de 8 maneiras de maximizar o valor do seu estoque de inicialização 5 etapas para obter seus funcionários a bordo com opções de ações. Empresa.
8 Perguntas freqüentes sobre opções de estoque em Startups.
06/02/2018 & # 0183; & # 32; O preço de exercício é fixado no momento da concessão da opção no seu justo valor de mercado. Se ela quiser exercer suas opções, ela tem que pagar o preço de exercício vezes o número de ações (10 centavos de dólares em 40.000 ou $ 4000).
Quais são as diferenças entre equidade versus opções de ações.
Carta responde a pergunta: quanto vale a pena valer suas opções de ações e como você deve pensar sobre seu valor. Quando você deve se exercitar e por quê?
5 perguntas que você deve perguntar antes de aceitar um trabalho de inicialização.
Você acabou de receber uma oferta de emprego a partir de uma inicialização que inclui 50.000 opções de compra de ações. mas estimando o valor de suas opções de estoque Startup John Greathouse.
Como as opções de estoque de empregado funcionam nas empresas de inicialização.
Deve respeitar-se o brainiac que inventou o pool shuffle da opção. Colocando a opção (o valor da inicialização de estoque para configurar uma opção de 15%).
Juntando-se a uma inicialização no estágio inicial? - COUNSEL DE OPÇÃO DE ACÇÃO, P. C.
02/01/2017 & # 0183; & # 32; Um fundador-virou-venture-capitalista revela como não ser pisoteado por uma inicialização do unicórnio se você é um empregado com opções de compra de ações.
Opções de ações ou ações restritas - Advogados de inicialização.
As opções de estoque são uma grande parte do sonho de inicialização, mas muitas vezes não são bem compreendidas, mesmo por executivos seniores que derivam grande parte de suas receitas de opções de ações.
Opções de ações do empregado: problemas de avaliação e preço.
Como uma empresa privada deve valorar opções de ações de acordo com a Seção 409A? Metodologia básica para avaliações e portos seguros para startups e fundadores tecnológicos.
8 maneiras de maximizar o valor do seu estoque de inicialização.
Se uma inicialização sempre pode emitir novos compartilhamentos, o que na opção. Trabalhei em um início de ISP em uma opção em US $ 16 por ação, o valor do estoque em.
As perguntas de opção de estoque que os funcionários iniciantes devem solicitar.
Por que oferecer equidade dos funcionários em sua inicialização? Alocando o capital próprio aos seus empregados na forma de planos de opções de ações.
Como os funcionários valorizam (muitas vezes incorretamente) suas opções de estoque.
Eu regularmente ouvi as pessoas ficando entusiasmadas por terem sido premiadas opções de ações em suas empresas, mas não tendo idéia do que o valor dessas opções realmente são.
Opções de ações ou ações? Qual é a maneira preferida de.
Pergunte-me sobre o tempo que eu desisti de cerca de US $ 60.000 em salário anual para manter 2% do estoque de uma empresa em opções de empregados baratos. Eu fui de um bom salário para fazer.
&cópia de; Opções de ações valor de inicialização Opção Binária | Valor de inicialização das opções de ações Melhores opções binárias.

14 perguntas cruciais a serem feitas quando seu trabalho oferece opções de ações.
Obtenha as melhores dicas de crédito no Credit Visionary.
Em abril de 2018, escrevi um post intitulado The 12 Crucial Questions About Stock Options. Era para ser uma lista detalhada de perguntas relacionadas a opções que você deve solicitar quando receber uma oferta para se juntar a uma empresa privada.
Com base no feedback excelente que recebi dos nossos leitores sobre estas e postagens sucessivas sobre as opções, agora estou ampliando a publicação original um pouco. Eu realmente fiz apenas um pouco de atualização e planteei 2 novas preocupações e # 8211; daí a ligeira alteração do título: as 14 perguntas cruciais sobre as opções de ações.
Na próxima vez, alguém lhe oferece 100.000 opções para se juntar a seus negócios, não fique muito emocionado.
Ao longo da minha profissão de 30 anos no Silicon Valley, eu realmente assisti muitos trabalhadores caírem sob a armadilha de se concentrar no número de alternativas que foram fornecidas. (Definição rápida: uma opção de compra de ações é o direito, no entanto, não o compromisso, comprar uma parcela das ações da empresa eventualmente no futuro com o custo do exercício.) Na realidade, o número bruto é um meio que os membros da equipe de negócios usam e # 8217 ; naivet & eacute ;. O que realmente importa é a porcentagem do negócio que as opções representam e a rapidez com que elas se entregam.
Quando você recebe uma oferta para se juntar a um negócio, peça essas 14 preocupações para verificar a atratividade de sua oferta de opção:
1. Qual parte do negócio as alternativas oferecidas representam? Este é o único problema essencial. Sem dúvida, quando se trata de escolhas, um número maior é melhor do que um número de tamanho menor, porém a participação percentual é exatamente o que realmente importa. Por exemplo, se uma empresa oferece 100 mil alternativas de 100 milhões de ações impressionantes e outra empresa oferece 10 mil opções de 1 milhão de ações impressionantes, a segunda oferta é 10 vezes mais atraente. Isso é certo. A oferta de compartilhamento menor neste caso é muito mais atrativa, porque se a empresa for adquirida ou for pública, você valerá 10 vezes mais (para quem não tiver no sono ou cafeína, sua participação de 1% no negócio durante essa última oferta derrota os 0,1% dos anteriores).
2. Você está constituído por todas as ações das ações completas em circulação com o objetivo de calcular o percentual acima? Alguns negócios tentam fazer suas ofertas se parecerem mais atraentes, determinando a porcentagem de participação que a sua oferta representa, utilizando uma contagem de compartilhamento de tamanho menor que o que eles poderiam. Para que a porcentagem pareça maior, a empresa não poderia incluir tudo o que deveria no denominador. Você desejará atendê-lo, a empresa usa ações completamente diluídas excepcionais para calcular a parcela, consistindo de todos os seguintes itens:
Ações ordinárias / unidades de ações restritas ações preferenciais opções em circulação ações não emitidas continuando a ser o grupo de opções de warrants.
É uma grande bandeira vermelha se um potencial empregador não divulgará seu número de ações em circulação uma vez que você tenha alcançado a fase de oferta. Normalmente, é um sinal de que eles têm algo que estão tentando esconder, o que eu duvido é o tipo de empresa para a qual deseja trabalhar.
3. Qual é a taxa de mercado para sua posição? Cada tarefa tem uma taxa de mercado de renda e patrimônio. As taxas de mercado são tipicamente determinadas pela função da tarefa e pela antiguidade e a variedade de funcionários e locais de sua empregada em potencial. Desenvolvemos o nosso Dispositivo de Pagamento de Salário e de Poupança de partida para ajudá-lo a determinar exatamente o que inclui uma oferta justa.
4. Como a sua opção de opção recomendada se compara ao mercado? Um negócio geralmente tem uma política que coloca seus subsídios alternativos em relação às médias do mercado. Algumas empresas pagam salários mais altos do que o mercado para que eles possam fornecer menos equidade. Alguns fazem o contrário. Alguns dão uma seleção. Todas as coisas sendo iguais, o mesmo mais bem-sucedido da empresa, a oferta de percentil mais baixo que eles geralmente estão dispostos a fornecer. Por exemplo, um negócio como Dropbox ou Uber é mais provável que forneça equidade abaixo do percentil 50 devido ao fato de que a certeza da recompensa e a magnitude mais provável do resultado são tão fantásticas em termos de dólares absolutos. Simplesmente porque você acredita que você é impressionante, não indicará que sua empresa em potencial fará uma oferta no 75º percentil. Percentile é mais descoberto pela atratividade do empregador. Você precisará saber qual é a política da sua empresa em potencial para avaliar sua oferta dentro do contexto apropriado.
5. O que é a agenda de aquisição? O horário de aquisição normal é superior a quatro anos com um acantilado alto de um ano. Se você fosse embora antes do penhasco alto, você não obterá nada. Seguindo o penhasco, você de imediato colete 25% de suas ações e, posteriormente, suas alternativas são coletivas mensalmente. Qualquer coisa além disso é estranha e deve desencadear você para questionar o negócio ainda mais. Alguns negócios podem pedir uma aquisição de cinco anos, mas isso deve dar uma pausa.
6. Alguma coisa acontece com meus compartilhamentos adquiridos se eu sair no passado, minha agenda completa de aquisição foi concluída? Normalmente, você consegue manter qualquer coisa que você confira, desde que exerça dentro de 90 dias após a saída da sua empresa. Com um punhado de negócios, a empresa merece redimir suas ações adquiridas ao custo do exercício se você deixar o negócio antes de uma ocasião de liquidez. Em essência, isso significa que, se você deixar um negócio em 2 ou 3 anos, suas escolhas não valem absolutamente nada, mesmo que algumas delas tenham adquirido. O Skype e seus patrocinadores foram atacados em 2018 por essa política.
7. Você permite o exercício antecipado das minhas escolhas? Permitir que os trabalhadores exercem suas escolhas antes que elas tenham sido investidas podem ser uma vantagem fiscal para os trabalhadores, devido ao fato de que eles têm a oportunidade de ter seus ganhos tributados nas taxas de ganhos de capital de longo prazo. Esse recurso geralmente é fornecido aos membros da equipe adiantada devido ao fato de que eles são os únicos que podem se beneficiar.
8. Existe alguma aceleração da minha aquisição se a empresa for obtida? Deixe-nos declarar que você trabalha em um negócio por dois anos e depois obtém-se. Você pode se inscrever no negócio pessoal porque não queria trabalhar para um negócio enorme. Se assim for, você provavelmente deseja alguma aceleração para que você possa deixar a empresa após a aquisição.
Muitas empresas também oferecem mais 6 meses de aquisição após a aquisição, se você tiver desativado. Você não gostaria de cumprir uma sentença de prisão em uma empresa com a qual você não se sente confortável, e, claro, um despedimento não é incomum após uma aquisição.
Do ponto de vista da empresa, a desvantagem da aceleração é que o adquirente provavelmente pagará um menor custo de aquisição devido ao fato de que talvez seja necessário liberar ainda mais alternativas para substituir indivíduos que saem cedo. Mas a aceleração é um benefício prospectivo, e é realmente bom ter.
9. As opções estão com preço ao valor justo de mercado determinado por uma avaliação independente? Exatamente o que é o preço de exercício em relação ao preço do estoque favorecido fornecido na sua última rodada? Os empreendimentos com capital de risco originam opções para os trabalhadores com uma taxa de exercícios que é uma fração de exatamente o que os investidores pagam. Se as suas escolhas tiverem um preço próximo ao valor das ações preferenciais, as opções têm menor valor.
Quando você pergunta essa preocupação, você está tentando encontrar um corte de preço grande. No entanto, um corte de preço de até mais de 67% é mais provável de ser considerado desfavoravelmente pelo Internal Revenue Service e poderia levar a um imposto tributário inesperado, uma vez que você deve pagar um imposto sobre qualquer ganho resultante das escolhas em um custo de exercício abaixo do preço de mercado razoável. Se o estoque favorecido fosse fornecido, digamos, com um valor de US $ 5 por ação, e suas alternativas têm um custo de exercício de US $ 1 por ação versus o preço de mercado razoável de US $ 2 por ação, então você provavelmente deve impostos sobre o seu benefício não razoável & # 8211; qual é a diferença entre US $ 2 e US $ 1.
10. Quando foi a última avaliação típica de estoque da sua empresa proposta? Apenas os conselhos de administração podem fornecer opções tecnicamente, portanto, você geralmente não conhece o preço de exercício das opções na carta de oferta até o seu quadro seguinte cumprir. Se o seu empregador sugerido é pessoal, o seu conselho deve determinar o custo do exercício de suas alternativas exatamente pelo que se refere como uma avaliação 409A (o nome, 409A, vem da seção reguladora do código tributário). Se ele for muito tempo considerando que a última avaliação, a empresa terá que fazer outra. Provavelmente isso significa que o seu preço do exercicio aumentará e, em conformidade, suas alternativas serão menos úteis. As avaliações 409A geralmente são feitas a cada 6 meses.
11. Exatamente em que a última rodada valorizou o negócio? O valor informa o contexto sobre a importância das suas alternativas. As ações típicas não valem tanto quanto as ações preferenciais até que seu negócio seja obtido ou se torne público, então não sucumbir a um campo de vendas que promova o valor de suas opções sugeridas com o custo preferencial mais atualizado. Mais uma vez, é um grande aviso se um empregador em perspectiva não divulgou a avaliação de seu financiamento quando você realmente alcançou o estágio de oferta. Normalmente, é um sinal de que eles estão tentando esconder o que eu duvido é o tipo de empresa para a qual você quer trabalhar.
12. Quanto tempo durará o seu financiamento atual? Financiamentos adicionais implicam um mergulho adicional. Se um financiamento aparecer, então você deve considerar o que sua propriedade será pós-financiamento (isto é, consistente na nova diluição) para fazer uma comparação justa com o mercado. Consulte a questão número um para o porquê isso é importante.
13. Quanto dinheiro ganhou o negócio? Isso pode parecer contraintuitivo, no entanto, existem inúmeros casos em que você está ainda pior em uma empresa que realmente criou muito dinheiro contra um pouco. A questão está entre Preferência de liquidez. Os investidores de capital de risco constantemente têm o direito de ter uma primeira chamada sobre os ganhos da venda do negócio em um cenário de baixa, aproximadamente, o valor que eles realmente investiram (simplesmente coloca o acesso à preocupação com os lucros gerados). Por exemplo, se uma empresa arrecadou US $ 40 milhões, todos os lucros irão para os investidores em uma venda de US $ 40 milhões ou menos.
Os investidores só transformarão suas ações preferenciais em ações usuais uma vez que a avaliação da venda equivale à quantidade que investiram dividida pela sua propriedade. Neste exemplo, se os investidores possuírem 50% do negócio e investiram US $ 40 milhões, eles não se converterão em ações típicas até que a empresa receba uma oferta de US $ 80 milhões. Se o negócio for vendido por US $ 60 milhões, eles ainda receberão US $ 40 milhões. No entanto, se a empresa for vendida por US $ 90 milhões, obterá US $ 45 milhões (o restante vai para os fundadores e funcionários). Você nunca quis se juntar a uma empresa que realmente criou um monte de dinheiro e tem pouca força depois de alguns anos devido ao fato de que não é provável que você aproveite suas alternativas.
14. O seu potencial empregador tem uma política relativa ao subsídio de ações de acompanhamento? Como explicamos no The Wealthfront Equity Plan, as empresas esclarecidas compreendem que eles devem emitir ações adicionais para os membros da equipe pós-início da data para lidar com promoções e eficiência extraordinária e como uma recompensa para mantê-lo uma vez que você chegar longe em sua aquisição . É muito importante entender em que condição você pode obter opções adicionais e como suas opções totais após quatro anos podem comparar em empresas que fazem ofertas contundentes. Para mais perspectiva sobre esta questão, pedimos que você leia A Worker Viewpoint on Equity.
Quase todas as questões levantadas nesta publicação são igualmente pertinentes para unidades de estoque restrito ou RSUs. As RSUs diferem das alternativas de estoque porque com elas você obtém valor independente de o valor da empresa da empresa aumentar ou não. Como resultado, os membros da equipe tendem a receber menos ações da RSU do que poderiam obter opções de estoque para o mesmo trabalho. As UREs geralmente são emitidas em circunstâncias em que uma empresa potencial recentemente arrecadou dinheiro em uma grande avaliação (bem em mais de US $ 1 bilhão) e levará um tempo para se tornar essa taxa. Por causa de uma alternativa de estoque não ter muito valor, porque simplesmente aprecia quando e se o valor da sua empresa aumentar.
Esperamos que você encontre nossa lista nova e melhorada. Por favor, mantenha seus comentários e problemas próximos e saiba se você acha que nós perdemos tudo.
VEJA COMO: Há uma razão inescapável Alguns investidores estão vinculados a falhar.

Se você deseja obter ricos em uma inicialização, é melhor você fazer essas perguntas antes de aceitar o trabalho.
Thumbs up todo depois de Yext anunciou uma grande rodada de financiamento de US $ 27 milhões. Mas esses funcionários provavelmente não têm idéia do que isso significa para suas opções de estoque. Daniel Goodman via Business Insider.
Quando a primeira colocação em operação de Bryan Goldberg, Bleacher Report, vendida por mais de US $ 200 milhões, os funcionários com opções de ações reagiram de duas maneiras:
"As reacções de algumas pessoas foram como, 'Oh meu Deus, isso é mais [dinheiro] do que eu nunca poderia ter imaginado'", Goldberg disse anteriormente ao Business Insider em uma entrevista sobre a venda. "Algumas pessoas eram como, 'É isso?' 'Você nunca soube o que seria."
Se você é um empregado em uma inicialização - não é um fundador ou um investidor - e sua empresa lhe dá ações, provavelmente você vai acabar com "ações ordinárias" ou opções de ações ordinárias. O estoque comum pode torná-lo rico se sua empresa for pública ou for comprada a um preço por ação significativamente acima do preço de exercício de suas opções. Mas a maioria dos funcionários não percebeu que os detentores de ações ordinárias só recebem o pagamento da pote de dinheiro que resta após os acionistas preferenciais terem feito seu corte. E em alguns casos, os detentores de ações ordinárias podem achar que os acionistas preferenciais receberam termos tão bons que a ação comum é quase inútil, mesmo que a empresa seja vendida por mais dinheiro do que investidores.
Se você fizer algumas perguntas inteligentes antes de aceitar uma oferta, e depois de cada rodada significativa de novos investimentos, você não precisa se surpreender com o valor - ou a falta disso - de suas opções de estoque quando uma inicialização sair.
Pedimos a um capitalista de risco ativo da Nova York, que se senta no conselho de várias startups e elabora regularmente folhas de termos, o que questiona os funcionários deve estar perguntando aos seus empregadores. O investidor pediu para não ser nomeado, mas ficou feliz em compartilhar a bola interior.
Veja o que as pessoas inteligentes perguntam sobre suas opções de compra de ações:
1. Pergunte quanto de equidade você está sendo oferecido em uma base totalmente diluída.
"Às vezes" as empresas vão apenas dizer o número de ações [que você está recebendo], o que é totalmente sem sentido porque a empresa poderia ter um bilhão de ações ", diz o capitalista de risco. "Se eu apenas disser:" Você vai conseguir 10 mil ações ", isso parece muito, mas pode ser uma quantidade muito pequena".
Em vez disso, pergunte qual a porcentagem da empresa que essas opções de ações representam. Se você perguntar sobre isso em uma base "totalmente diluída", isso significa que o empregador terá que levar em consideração todas as ações que a empresa é obrigada a emitir no futuro, e não apenas ações que já foram entregues. Ele também leva em consideração todo o pool de opções. Um pool de opções é um estoque que é reservado para incentivar os funcionários iniciantes.
Uma maneira mais simples de fazer a mesma pergunta: "Qual porcentagem da empresa minhas ações realmente representam?"
2. Pergunte quanto tempo o "pool de opções" da empresa durará e quanto mais dinheiro a empresa provavelmente aumentará, então você sabe se e quando sua propriedade pode ficar diluída.
Cada vez que uma empresa emite novas ações, os acionistas atuais são "diluídos", o que significa que a porcentagem da empresa que eles possuem diminui. Ao longo de muitos anos, com muitos novos financiamentos, uma porcentagem de propriedade que começou grande pode ser diluída para uma pequena participação percentual (mesmo que seu valor possa ter aumentado). Se a empresa que você está juntando provavelmente for necessário aumentar muito mais dinheiro nos próximos anos, portanto, você deve assumir que sua participação será diluída consideravelmente ao longo do tempo.
Algumas empresas também aumentam suas reservas de opções em uma base ano-a-ano, o que também dilui os acionistas existentes. Outros reservam uma piscina grande o suficiente para durar alguns anos. Os pools de opções podem ser criados antes ou depois de um investimento ser bombeado para a empresa. Fred Wilson da Union Square Ventures gosta de pedir fundos de opções pré-dinheiro (pré-investimento) que são grandes o suficiente para "financiar as necessidades de contratação e retenção da empresa até o próximo financiamento".
O investidor com o qual falamos explicou como os pools de opções são muitas vezes criados por investidores e empresários juntos: "A idéia é que, se eu investire em sua empresa, ambos concordamos:" Se nós vamos chegar daqui para lá, vamos ter que contratar essas muitas pessoas. Então, vamos criar um orçamento de equidade. Eu acho que vou ter que distribuir provavelmente 10, 15 por cento da empresa [para chegar lá] ". Esse é o pool de opções ".
3. Em seguida, você deve descobrir quanto dinheiro a empresa criou e em que termos.
Quando uma empresa gera milhões de dólares, isso parece muito legal. Mas isso não é dinheiro livre, e muitas vezes vem com condições que podem afetar suas opções de estoque.
"Se eu sou um empregado se juntando a uma empresa, o que eu quero ouvir é que você não conseguiu arrecadar muito dinheiro e é" preferencialmente preferencial [estoque] ", diz o investidor.
O tipo de investimento mais comum vem na forma de ações preferenciais, o que é bom para funcionários e empresários. Mas existem diferentes sabores de ações preferenciais. E o valor final de suas opções de ações dependerá de qual tipo sua empresa emitiu.
Aqui estão os tipos mais comuns de ações preferenciais.
Direto preferido - Em uma saída, os detentores de ações preferenciais são pagos antes que os titulares de ações comuns (funcionários) recebam um centavo. O dinheiro para os preferidos vai diretamente para os bolsos dos capitalistas de risco. O investidor nos dá um exemplo: "Se eu investir US $ 7 milhões em sua empresa, e você vende por US $ 10 milhões, os primeiros US $ 7 milhões a sair serão preferidos e o restante vai para ações ordinárias. Se a colocação em operação for vendida para qualquer coisa o preço de conversão (geralmente a avaliação pós-dinheiro da rodada), o que significa que um acionista preferencial e direto obterá qualquer porcentagem da empresa que eles possuem ".
Participante preferido - Participação preferencial vem com um conjunto de termos que aumentam a quantidade de dinheiro que os detentores preferenciais obterão por cada ação em um evento de liquidação. A participação preferencial preferencial coloca um dividendo sobre ações preferenciais, que supera ações ordinárias quando uma inicialização sai. Os investidores com participantes preferenciais recebem seu dinheiro de volta durante um evento de liquidação (como os detentores de ações preferenciais), além de um dividendo predeterminado.
O estoque preferencial participativo geralmente é oferecido quando um investidor não acredita que a empresa valha tanto quanto os fundadores acreditam que é ", então eles concordam em investir para desafiar a empresa a crescer o suficiente para justificar e eclipsar as condições da participação detentores de ações preferenciais.
A linha de fundo com a participação preferida é que, uma vez que os detentores preferenciais foram pagos, haverá menos do preço de compra para os acionistas comuns (ou seja, você).
Preferência de liquidação múltipla - Este é outro tipo de termo que pode ajudar os detentores preferenciais e parafusar os detentores de ações comuns. Ao contrário dos ações preferenciais diretas, que pagam o mesmo preço por ação que as ações ordinárias em uma transação acima do preço ao qual a preferencial foi emitida, uma preferência de liquidação múltipla garante que os detentores preferenciais receberão um retorno sobre seu investimento.
Para usar o exemplo inicial, em vez de um investidor de US $ 7 milhões investido voltando para eles no caso de uma venda, uma preferência de liquidação de 3X promete aos detentores preferenciais obter os primeiros $ 21 milhões de uma venda. Se a empresa vendesse por US $ 25 milhões, ou seja, os detentores preferenciais receberiam US $ 21 milhões, e os acionistas comuns teriam que dividir US $ 4 milhões. Uma preferência de liquidação múltipla não é muito comum, a menos que uma inicialização tenha lutado e os investidores exigem um maior prêmio pelo risco que eles estão tomando.
Nosso investidor estima que 70% de todas as startups com ações garantidas têm ações preferenciais diretas, enquanto cerca de 30% possuem alguma estrutura nas ações preferenciais. Hedge funds, esta pessoa diz, muitas vezes gosta de oferecer grandes avaliações para ações preferenciais participantes. A menos que eles estejam excepcionalmente confiantes em seus negócios, os empresários devem ter cuidado com as promessas, como "Eu quero apenas participar preferencialmente e desaparecerá na liquidação 3x, mas vou investir em uma avaliação de bilhões de dólares". Nesse cenário, os investidores, obviamente, acreditam que a empresa não alcançará essa avaliação - caso em que eles recebem 3X seu dinheiro de volta e podem acabar com os detentores de ações ordinárias.
4. Quanto, se alguma, a dívida gerou a empresa?
A dívida pode assumir a forma de dívida de risco ou uma nota convertível. É importante que os funcionários saibam quanto de dívida há na empresa, porque isso precisará ser pago aos investidores antes que um empregado veja um centavo de uma saída.
Tanto a dívida como uma nota conversível são comuns em empresas que estão indo extremamente bem ou estão extremamente incomodadas. Ambos permitem que os empresários adiem o preço de sua empresa até que suas empresas tenham maiores avaliações. Aqui estão as ocorrências e definições comuns:
Dívida - Este é um empréstimo de investidores e a empresa tem que devolvê-lo. "Às vezes, as empresas levantam uma pequena quantidade de dívida de empreendimento, que pode ser usada para muitos objetivos, mas o objetivo mais comum é estender sua pista para que eles possam obter uma avaliação mais alta na próxima rodada", diz o investidor.
Nota convertível - Esta é uma dívida que é projetada para converter em patrimônio em uma data posterior e maior preço da ação. Se uma colocação inicial aumentou a dívida e uma nota conversível, pode haver uma discussão entre os investidores e os fundadores para determinar quais as quais são pagas primeiro em caso de saída.
5. Se a empresa levantou um monte de dívidas, você deve perguntar como funcionam os termos de pagamento em caso de venda.
Se você está em uma empresa que arrecadou muito dinheiro, e você sabe que os termos são algo diferente do estoque preferido, você deve fazer essa pergunta.
Você deve perguntar exatamente qual o preço de venda (ou valorização) que suas opções de compra de ações começam a ser "no dinheiro", tendo em mente que a dívida, as notas conversíveis e a estrutura sobre as ações preferenciais afetarão esse preço.
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As 14 perguntas cruciais sobre opções de ações.
Em abril de 2018, escrevi uma postagem no blog intitulada The 12 Crucial Questions About Stock Options. Era uma lista abrangente de questões relacionadas à opção que você precisa fazer quando você receber uma oferta para se juntar a uma empresa privada. Com base no feedback excelente que recebi dos nossos leitores sobre este e postagens subsequentes sobre as opções, agora estou expandindo a publicação original um pouco. Eu fiz apenas um pouco de atualização e plantei duas novas perguntas - daí a leve mudança de título: as 14 perguntas cruciais sobre opções de estoque.
Na próxima vez que alguém lhe oferecer 100.000 opções para se juntar à sua empresa, não fique excitado demais.
Ao longo da minha carreira de 30 anos no Silicon Valley, assisti muitos empregados caírem na armadilha de focar no número de opções que lhes foram oferecidas. (Definição rápida: uma opção de compra de ações é o direito, mas não a obrigação, de comprar uma parcela das ações da empresa em algum ponto do futuro no preço de exercício.) Na verdade, o número bruto é uma forma de as empresas desempenharem em funcionários 'ingenuidade'. O que realmente interessa é a porcentagem da empresa que as opções representam e a rapidez com que elas se entregam.
Quando você recebe uma oferta para se juntar a uma empresa, faça essas 14 perguntas para verificar a atratividade da sua oferta de opções:
1. Qual porcentagem da empresa as opções oferecidas representam? Esta é a questão mais importante. Obviously, when it comes to options a larger number is better than a smaller number, but percentage ownership is what really matters. For example if one company offers 100,000 options out of 100 million shares outstanding and another company offers 10,000 options out of 1 million shares outstanding then the second offer is 10 times as attractive. That’s right. A oferta de compartilhamento menor neste caso é muito mais atrativa, porque se a empresa for adquirida ou for pública, você valerá 10 vezes mais (para quem não tem sono ou cafeína, sua participação de 1% na empresa naquela última oferta supera 0,1% do primeiro).
2. Are you including all shares in the total shares outstanding for the purpose of calculating the percentage above? Some companies attempt to make their offers look more attractive by calculating the ownership percentage your offer represents using a smaller share count than what they could. To make the percentage seem bigger, the company may not include everything it should in the denominator. Você quer se certificar de que a empresa usa ações totalmente diluídas em circulação para calcular a porcentagem, incluindo todas as seguintes:
Common stock/Restricted stock units Preferred stock Options outstanding Unissued shares remaining in the options pool Warrants.
It’s a huge red flag if a prospective employer won’t disclose their number of shares outstanding once you’ve reached the offer stage. It’s usually a signal that they have something they’re trying to hide which I doubt is the kind of company you want to work for.
3. What is the market rate for your position? Every job has a market rate for salary and equity. Market rates are typically determined by your job function and seniority and your prospective employer’s number of employees and location. We built our Startup Salary & Equity Compensation Tool to help you determine what comprises a fair offer.
4. How does your proposed option grant compare to the market? A company typically has a policy that places its option grants relative to market averages. Some companies pay higher salaries than market so they can offer less equity. Some do the opposite. Some give you a choice. All things being equal, the more successful the company, the lower percentile offer they are usually willing to offer. Por exemplo, uma empresa como Dropbox ou Uber provavelmente oferecerá uma equidade abaixo do percentil 50 porque a certeza da recompensa e a magnitude provável do resultado são tão grandes em termos de dólares absolutos. Just because you think you’re outstanding doesn’t mean your prospective employer is going to make an offer in the 75 th percentile. Percentile is most determined by the employer’s attractiveness. You’ll want to know what your prospective employer’s policy is in order to evaluate your offer within the proper context.
What percentage of the company do the options offered represent? This is the single most important question.
5. What is the vesting schedule? O horário de aquisição típico é superior a quatro anos com um penhasco de um ano. If you were to leave before the cliff, you get nothing. Following the cliff, you immediately vest 25% of your shares and then your options vest monthly. Anything other than this is odd and should cause you to question the company further. Some companies might request five-year vesting, but that should give you pause.
6. Does anything happen to my vested shares if I leave before my entire vesting schedule has been completed? Typically you get to keep anything you vest as long as you exercise within 90 days of leaving your company. At a handful of companies, the company has the right to buy back your vested shares at the exercise price if you leave the company before a liquidity event. In essence, this means that if you leave a company in two or three years, your options are worth nothing, even if some of them have vested. Skype and its backers came under fire last year for such a policy.
7. Do you allow early exercise of my options? Allowing employees to exercise their options before they have vested can be a tax benefit to employees, because they have the opportunity to have their gains taxed at long-term capital gains rates. This feature is usually only offered to early employees because they are the only ones who could benefit.
8. Is there any acceleration of my vesting if the company is acquired? Let’s say you work at a company for two years and then it gets acquired. You may have joined the private company because you didn’t want to work for a big company. If so, you would probably want some acceleration so you could leave the company after the acquisition.
Many companies also offer an additional six months of vesting upon acquisition if you are fired. You wouldn’t want to serve a prison sentence at a company you’re not comfortable with, and, of course, a lay-off is not uncommon after an acquisition.
From the company’s perspective, the downside of offering acceleration is the acquirer will likely pay a lower acquisition price because it might have to issue more options to replace the people who leave early. Mas a aceleração é um benefício potencial, e é uma coisa muito boa ter.
9. Are options priced at fair market value determined by an independent appraisal? What is the exercise price relative to the price of the preferred stock issued in your last round? Venture capital-backed startups issue options to employees at an exercise price that’s a fraction of what the investors pay. If your options are priced near the value of the preferred stock, the options have less value.
When you ask this question, you’re looking for a big discount. But a discount of more than 67% is likely to be looked upon unfavorably by the IRS and could lead to an unexpected tax liability because you would owe a tax on any gain that results from being issued options at an exercise price below fair market value. If the preferred stock was issued, say, at a value of $5 a share, and your options have an exercise price of $1 per share vs. the fair market value of $2 per share, then you’ll likely owe taxes on your unfair benefit – which is the difference between $2 and $1.
Certifique-se de que a empresa usa partes totalmente diluídas em circulação para calcular sua porcentagem.
10. When was your proposed employer’s last common stock appraisal? Only boards of directors can technically issue options, so you will typically not know the exercise price of the options in your offer letter until your board next meets. If your proposed employer is private then your board must determine the exercise price of your options by what is referred to as a 409A appraisal (the name, 409A, comes from the governing section of the tax code). If it’s been a long time since the last appraisal, the company will have to do another one. Provavelmente isso significa que o seu preço de exercício aumentará e, consequentemente, suas opções serão menos valiosas. 409A appraisals are typically done every six months.
11. O que a última rodada valorizou a empresa? The value tells you the context for how valuable your options could be. Common stock is not worth as much as preferred stock until your company is acquired or goes public, so don’t fall for a sales pitch that promotes the value of your proposed options at the latest preferred price. Again it’s a huge red flag if a prospective employer won’t disclose the valuation from their financing once you’ve reached the offer stage. It’s usually a signal that they have something they’re trying to hide which I doubt is the kind of company you want to work for.
12. How long will your current funding last? Additional financings mean additional dilution. Se um financiamento for iminente, então você precisa considerar o que sua propriedade será pós-financiamento (ou seja, incluindo a nova diluição) para fazer uma comparação justa com o mercado. Refer back to question number one for why this is important.
13. How much money has the company raised? This might seem counterintuitive, but there are many instances where you are worse off in a company that has raised a lot of money vs. a little. The issue is one of Liquidity Preference . Venture capital investors always receive the right to have first call on the proceeds from the sale of the company in a downside scenario up to the amount they have invested (in other words priority access to any proceeds raised). For example, if a company has raised $40 million dollars then all proceeds will go to the investors in a sale of $40 million or less.
Ascertain and compare the current market rate for your position to your offer and, likewise, try to compare any proposed option grant to the market as well.
Investors will only convert their preferred stock into common stock once the sale valuation is equal to the amount they invested divided by their ownership. In this example if investors own 50% of the company and have invested $40 million then they won’t convert into common stock until the company receives an offer of $80 million. If the company is sold for $60 million they’ll still get $40 million. However if the company is sold for $90 million they’ll get $45 million (the remainder goes to the founders and employees). You never want to join a company that has raised a lot of money and has very little traction after a few years because you are unlikely to get any benefit from your options.
14. Does your prospective employer have a policy regarding follow-on stock grants? As we explained in The Wealthfront Equity Plan, enlightened companies understand they need to issue additional stock to employees post-start-date to address promotions and incredible performance and as an incentive to retain you once you get far into your vesting. It’s important to understand under what circumstance you might get additional options and how your total options after four years might compare at companies that make competing offers. For more perspective on this issue we encourage you to read An Employee Perspective on Equity.
Almost every issue raised in this post is equally relevant to Restricted Stock Units or RSUs. RSUs differ from stock options in that with them you receive value independent of whether your employer’s company value increases or not. As a result employees tend to be given fewer RSU shares than they might receive in the form of stock options for the same job. RSUs are most often issued in circumstances when a prospective employer has recently raised money at a huge valuation (well in excess of $1 billion) and it will take them a while to grow into that price. In that case a stock option might not have much value because it only appreciates when and if your company’s value rises.
We hope you find our new and improved list helpful. Please keep your feedback and questions coming and let us know if you think we missed anything.
Sobre o autor.
Andy Rachleff is Wealthfront’s co-founder, President and Chief Executive Officer. He serves as a member of the board of trustees and vice chairman of the endowment investment committee for University of Pennsylvania and as a member of the faculty at Stanford Graduate School of Business, where he teaches courses on technology entrepreneurship. Prior to Wealthfront, Andy co-founded and was general partner of Benchmark Capital, where he was responsible for investing in a number of successful companies including Equinix, Juniper Networks, and Opsware. He also spent ten years as a general partner with Merrill, Pickard, Anderson & Eyre (MPAE). Andy earned his BS from University of Pennsylvania and his MBA from Stanford Graduate School of Business.
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14 crucial questions about stock options

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Example of company valuation, shares, fundraising, and dilution (source)
If you’ve ever worked or considered working for a startup or fast-growing tech company, you probably have experienced or tried to learn about stock options, RSUs, and other types of equity compensation .
It is a confusing topic that is often not discussed clearly. This is unfortunate because it makes it harder to make good decisions. Many people learn the basic ideas through experience or reading, but equity compensation is a complicated and difficult area usually only thoroughly understood by professionals. Sadly, both companies and employees are routinely hurt by costly mistakes which might otherwise be avoidable.
This guide aims to improve that situation. It does not presume you have a law degree or MBA. The material is dense, but we endeavor to present it in a way that is understandable to lawyers and non-lawyers alike.
Think of the guide as a small book, not a blog. We suggest you star and refer to it in the future. An hour or two reading the material here and the linked resources could ultimately be among the most financially valuable ways you could spend that time.
This document and the discussion around it are not legal or tax advice. Talk to a professional if you need advice about your particular situation. See the full disclaimer below.
If you’re thinking of working for a company that is offering you equity, it is critical to understand both the basics and some very technical details about the exact type of compensation you are being offered, including the tax consequences. Equity compensation and tax might seem like different topics, but they are so intertwined it's hard to explain one without the other. An understanding of the underlying rules is necessary for negotiating fair offers — on both sides.
Of course, this guide can’t replace professional advice. But ask anyone who’s worked in startups and they’ll have stories of how they or their colleagues made costly mistakes as a result of not understanding the details. Assessing the advice you receive from your personal or company attorney can be easier when you have all the information to work with.
This guide applies to C corporations in the United States . It is geared towards employees, advisors, and independent contractors who want to know how stock and stock options in C corporations work. This includes most startups. Typically startups and major companies are C corporations, and not LLCs or S corporations. LLC equity compensation is different and not covered in this guide (yet). It may also be useful for founders or hiring managers, who need to talk about equity compensation with employees or potential hires, or anyone curious to learn about these topics. The aim is to be as helpful for the absolute beginner as it is for those with more experience.
We keep this brief, so you can skim and return to it easily. Sections are organized into individual points, so it’s easier to read, refer back to, contribute to, and correct. We link liberally, so we can define terms, include curated articles that have a lot more detail, and give credit where it is due.
🔹 Important or often overlooked tip ❗ “Serious” gotcha where risks or costs are significant 🔸 A gotcha or limitation to be aware of 🌪 Controversial topic where informed opinion varies significantly ☝️ Common confusion or misunderstanding, such as confusing terminology 📥 PDF or form or download.
This is an open guide . It’s open to contributions , so unlike a blog, it is living, and can be improved. While a lot of information on this topic is just a Google search away, it is scattered about. Many blogs and articles focus only on a narrow topic, are getting older, or are on sites supported by ads or other products. It should be possible to assemble this information sensibly, for free. This document was started by Joshua Levy and Joe Wallin. It’s a preliminary version, and no doubt has some errors and shortcomings, but we want to see it evolve.
If you have an idea or contribution that might improve this guide, please file issues or PRs . Questions are also welcome (as issues), as they help us next time we revise the guide. We gladly credit all contributors.
This section covers the fundamental concepts and terminology around stock, stock options, and equity compensation.
Your compensation is everything you get for working for a company. When you negotiate compensation with a company, the elements to think about are cash (salary and bonus), benefits (health insurance, retirement, other perks), and equity (what we discuss here). Equity compensation refers to owning stock or having the right to buy stock in a company. In general, this guide is focused on equity compensation in corporations, not limited liability companies. The reasons for this are: (i) corporations are the most common form of startup company in the U. S. (LLCs are rarely used as the choice of entity for technology startups), and (ii) equity compensation for limited liability companies is dramatically different from equity compensation in corporations. Equity compensation is commonly used for founders, executives, employees, contractors, advisors, directors, and others. The purpose of equity compensation is twofold: To attract the best talent; and To align incentives between individuals and the interests of the company. Equity compensation generally consists of stock or stock options or restricted stock units (RSUs) in the company. We’ll define these concepts next.
Stock represents ownership of the company, and is measured in shares . Founders, investors, employees, board members, and others like contractors or advisors may all have stock. Stock in private companies frequently cannot be sold and may need to be held indefinitely, or at least until the company is sold. In public companies , people can buy and sell stock on exchanges, but in private companies like startups, usually you can’t buy and sell stock easily. Public and some private companies can pay dividends to shareholders, but this is not common among technology startups. The total number of outstanding shares reflects how many shares are currently held by all shareholders. This number starts at an essentially arbitrary value (such as 10 million) and thereafter will increase as new shares are issued. It may increase or decrease for other reasons, too, such as stock splits and share buy back. If you have stock, what ultimately determines its value is percentage ownership of the entire company, not the absolute number of shares. To determine the percentage of the company a certain number of shares represent, divide it by the number of outstanding shares. ☝️ 🔹 However, there are subtleties to be aware of regarding what this outstanding total refers to: Private companies always have what is referred to as “authorized but unissued” shares. For example, a corporation might have 100 million authorized shares, but will only have actually issued 10 million shares. In this example, the corporation would have 90 million authorized but unissued shares. When you are trying to determine what percentage a number of shares represents, you do not make reference to the authorized but unissued shares. You actually want to know the total issued, but even this number can be confusing, as it can be computed more than one way. Typically, people refer to the total number of shares “issued and outstanding” or “fully diluted.” “Issued and outstanding” refers to the number of shares actually issued by the company to shareholders. Note this will not include shares that others may have an option to purchase. “Fully diluted” refers to all of the shares that have been issued, all of the shares that have been set aside in a stock incentive plan, and all of the shares that could be issued if all convertible securities (such as outstanding warrants) were exercised. A key difference is that this total will include all the shares in the employee option pool that are reserved but not yet issued to employees. (The option pool is discussed more below.) Generally, it’s best to know the fully diluted number to know the likely percentage a number of shares is worth in the future. The terminology mentioned here isn’t universally applied, either, so it’s worth discussing it to be sure there is no miscommunication.
It is hard to value private company stock. A stock certificate is a piece of paper that entitles you to something of highly uncertain value, and could well be worthless in the future, or highly valuable, depending on the fate of the company. 🔸 Generally, selling stock in a private company may be difficult, as the company is not listed on exchanges, and in any case, there may be restrictions on the stock imposed by the company. In startups, it is typical to hold the stock until the company is sold or becomes public in an IPO . A sale or IPO is often called an exit . Sales, dissolutions, and bankruptcy are sometimes called liquidations . 🔹 Private sales: In a few cases, you may be able to sell private company stock to another private party, such as an accredited investor who wants to become an investor in the company, but this is fairly rare. This is often called the secondary market . Sales generally require the agreement and cooperation of the company. For example, typically your shares would be subject to a right of first refusal in favor of the company (meaning, you couldn’t sell your shares to a third party without offering to sell it to the company first). Another possible roadblock is that private buyers may want the company's internal financials to establish the value of the stock, and this typically requires the cooperation of the company. There have been some efforts such as SharesPost, Equidate, and EquityZen to establish a market around such sales, particularly for well-known pre-IPO companies, but it’s still not a routine practice. Quora has more discussion on this topic.
Stock comes in two main types, common stock and preferred stock . You’ll also hear the term founders’ stock , which is (usually) common stock allocated at a company’s formation. It’s complicated, but in general preferred stock is stock that has rights, preferences, and privileges that common stock does not have. For example, preferred stock usually has a liquidation preference , which gives the preferred stock owner the right to be paid before the common stock owners upon liquidation. Liquidation overhang refers to how much liquidation preference is ahead of the common stock. For example, if the company has received hundreds of millions of dollars in investments from investors, the common stock will not be worth anything on a sale unless the sale price exceeds the liquidation overhang. Generally employees and service providers receive common stock or options to purchase common stock in return for their service, and investors receive preferred stock.
Stock options (more specifically, “employee stock options” when given to employees) are contracts that allow you to buy shares, which is called exercising the options. Options are not the same as stock; they are only the right to buy stock upon and subject to the conditions specified in the option agreement. Stock options allow you to buy shares at a fixed price per share, the strike price . The strike price is generally set lower (often much lower) than what people expect will be the future value of the stock, which means you can make money when you sell the stock. Options expire. You need to know how long the exercise window will be open. Options are only exercisable for a fixed period of time, typically seven to ten years as long as you are working for the company. ❗ Importantly, they also expire when you quit working for the company (e. g., 90 days after termination of service) — so can effectively be worthless if you cannot exercise them before you leave. 🔹 Recently (since around 2018) a few companies are finding ways to keep the exercise window open for years after leaving a company, and promote this as fairer to employees. See this list, which includes Amplitude, Clef, Coinbase, Pinterest, and Quora. 🔸 Vesting: Stock and stock options may be granted to you, but they come with a variety of conditions and limitations. One of the most significant conditions is that you usually “earn” rights to the shares or options over time or under certain events. This is called vesting . Vesting usually occurs according to a vesting schedule . You vest only while you work for the company. For example, it is very common to have stock or options vest over a period of four years, a bit at a time, where none of it is vested at first, and all of it is vested after four years. Vesting schedules can also have a cliff , where until you work for a given amount of time, you are 0% vested. For example, if your equity award had a one-year cliff and you only worked for the company for 11 months, you would not get anything, since you not have vested in any part of your award. Similarly, if the company is sold within a year, depending on what your paperwork says, you may also receive nothing on the sale of the company. A very common vesting schedule is vesting over 4 years, with a 1 year cliff. This means you get 0% vesting for the first 12 months, 25% vesting at the 12th month, and 1/48th (2.08%) more vesting each month until the 48th month. For example, if you leave just before a year is up, you get nothing, but if you leave after 3 years, you get 75%. Vesting might also occur in certain situations. You may have acceleration , where vesting is triggered if a company is sold ( single trigger ) or if it’s sold and you’re fired ( double trigger ). This is common for founders and not so common for employees. Grants for advisors typically vest over a shorter period than employee grants, often two years. Advisor grants also typically have a longer exercise window post termination of service. Typical terms for advisors, including equity levels, are available from the Founder Institute’s 📥 Founder/Advisor Standard Template (FAST).
Restricted stock units (RSUs) are a different type of compensation. RSUs are an agreement by the company to issue you shares of stock or the cash value of shares of stock on a future date. Each unit represents one share of stock or the cash value of one share of stock that you will receive in the future. The date on which you receive the shares or cash payment is the settlement date . 🔸 They may vest according to a vesting schedule. The settlement date may be the time-based vesting date or a later date based on, for instance, the date of a company's IPO. RSUs are more common for larger companies and options are more common for startups. RSUs are difficult in a startup or early stage company because when the RSUs vest, the value of the shares might be significant, and taxes will be owed on the receipt of the shares. This is not a bad result when the company has sufficient capital to help the employee make the tax payments, or the company is a public company that has put in place a program for selling shares to pay the taxes. But for cash-strapped private startups, neither of these are possibilities. This is the reason most startups use stock options, not RSUs or stock bonuses or stock awards. RSUs are often considered less preferable to grantees since they remove control over when you owe tax. Options, if granted with an exercise price equal to the fair market value of the stock, are not taxed until exercise, an event under the control of the optionee. If a company awards you an RSU or restricted stock award which vests over time, you will be taxed on the vesting schedule. You have been put on “autopilot” with respect to the timing of the tax event. This can be a really bad thing if, on the date of vesting, the shares are worth a lot and consequently you owe a lot of tax. ☝️ By the way, don’t confuse “restricted stock units” with “restricted stock” , which is an entirely different thing (described next).
These are a few different types of equity awards and topics that are less common, but we mention for completeness.
“Phantom equity” is a type of compensation award that references equity, but does not entitle the recipient to actual equity in the business. These awards come under a variety of different monikers, but the key to understanding them is knowing that they are really just cash bonus plans, but the cash amounts are determined by reference to a company's stock. Phantom stock is an example. A phantom stock award would be an award where you are entitled to a payment equal to the value of a share of the company's stock, upon the occurrence of certain events. Stock Appreciation Rights are another example. An SAR gives the recipient the right to receive a payment the amount of which is calculated by reference to the appreciation in the equity of the company. Phantom equity can have significant value, but may be perceived as less valuable by workers because of the contractual nature of the promises. Phantom equity plans can be set up as purely discretionary bonus plans, which is less attractive than owning a piece of something. Warrants are another kind of option to purchase stock. As an employee or advisor, you may not encounter them, but it’s worth knowing they exist. They are generally used in investment transactions (for example, in a convertible note offering, investors may also get a warrant; or a law firm may ask for one in exchange for vendor financing). They differ from stock options in that they are more abbreviated and stand-alone legal documents, not granted pursuant to a “plan.” Also, because they are usually used in the investment context, they do not typically include service-based vesting provisions or termination at end of service, and are valid for a set number of years (e. g., 10 years).
Now for the details around using stock and options for compensation.
Companies can give equity compensation as stock awards, stock options, or RSUs. While the intent of each is similar, they differ in many ways, particularly around taxation. RSUs generally don’t make sense for early stage companies. If companies do grant stock, it may be restricted stock . In this context, “restricted” refers to the fact that the stock will be subject to repurchase at the lower of fair market value or cost, which repurchase right lapses over the service-based vesting period. Typically, stock awards are limited to executives or very early hires, since once the value of the shares increases, the tax burden of receiving them can be too great for most people. Instead, it’s more common for employees to get stock options. 🔹 At some point early on, generally before the first employees are hired, stock will be allocated to a stock option pool . A typical size for this is 20% of the stock of the company, but it can be 10%, 15%, or other sizes. Once the pool is established, then the company's board of directors grants pieces of it to employees as they join the company. Often, the whole pool is never used. The size of the pool is not just about how generous the company is with employees; it is determined by complex factors between founders and investors. 🔹 Compensatory stock options come in two flavors: Incentive stock options (ISOs) (also called statutory stock options) Nonstatutory stock options (NSOs) (also called non-qualifying stock options, or NQOs) ISOs are common for employees because they have the possibility of being more favorable from a tax point of view than NSOs. They can only be granted to employees (not independent contractors or directors who are not also employees). But ISOs have a number of limitations and conditions and can also create difficult tax consequences. Mais sobre isso abaixo. 🔹 Sometimes, to help you lower your tax burden, the company makes it possible to early exercise (or forward exercise) stock options. This means you exercise them even before they vest: you exercise them and you become a stockholder, but the company has the right to repurchase the unvested shares (at the lower of the price you paid or the fair market value of the shares) if you quit working for the company. The company will typically repurchase the unvested shares should you leave the company before the stock you’ve purchased vests. 🔸 Stock options will expire after you leave a company (typically after 90 days ). You might early exercise, or exercise at different times during your employment, depending on how much it costs and what the tax implications are. Mais sobre isso abaixo. Companies may impose additional restrictions on stock that is vested. For example, your shares are very likely subject to a right of first refusal. And it can happen that companies reserve the right to repurchase vested shares in certain events.
Equity compensation awards can give rise to federal and state income taxes as well as employment taxes and Medicare surtax charges. We’ll first back up and discuss fundamentals of how different kinds of taxes are calculated.
You must pay federal, state, and in some cases, local taxes on income. State tax rates and rules vary significantly state to state. Since federal rates are much higher than state rates, you usually think of federal tax planning first. 🔹 In general, federal tax applies to many kinds of income. If you’re an employee at a startup, you need to consider four kinds of federal tax, each of which is computed differently: Ordinary income tax — the tax on your wages or salary income, as well as investment income that is “short-term” Employment taxes — Social Security and Medicare taxes that are withheld from your paycheck. The Social Security wage withholding rate is 6.2% up to the FICA wage base. The Hospital Insurance component is 1.45%, and it does not phase out above the FICA wage base. Long-term capital gains tax — taxes on investment gains that are “long-term” are taxed at a lower rate than ordinary income Alternative Minimum Tax (AMT) — an entirely different kind of tax that has separate rules and only applies in some situations Ordinary income tax applies in the situations you’re probably already familiar with, where you pay taxes on salaries or wages. Tax rates are based on filing status, i. e., if you are single, married, or support a family, and on how much you make, i. e. which income bracket you fall under. As of 2018, there are income brackets at 10% , 15% , 25% , 28% , 33% , 35% , and 39.6% marginal tax rates. Be sure you understand how these brackets work, and what bracket you’re likely to be in. ☝️ There is sometimes a misconception that if you move to a higher bracket, you’ll make less money. What actually happens is when you cross certain thresholds, each additional (marginal) dollar money you make is taxed at a higher rate, equal to the bracket you’re in. It looks roughly like this (source). Investment gains, such as buying and selling a stock, are similarly taxed at “ordinary” rates, unless they are long-term , which means you held the asset for more than a year. 📥 You also pay a number of other federal taxes (see a 2018 summary for all states), notably: 6.2% for Social Security on your first $118,500 1.45% for Medicare 0.9% Additional Medicare Tax on income over $200,000 (single) or $250,000 (married filing jointly) 3.8% Net Investment Income Tax on investment income if you make over $200,000 (single) or $250,000 (married filing jointly) Ordinary federal income tax, Social Security, and Medicare taxes are withheld from your paycheck by your employer and are called employment taxes . 🔹 Long-term capital gains are taxed at a lower rate than ordinary income tax: 0% , 15% , or 20% . This covers cases where you get dividends or sell stock after holding it a year. If you are in the middle brackets (more than about $37K and less than $413K of ordinary income), your long-term capital gains rate is 15% (more details). State long-term capital gains rates vary widely. California has the highest, at 13.3%, while other states have none. For this reason, some people even consider moving to another state if they are likely to have a windfall gain, like selling a lot of stock after an IPO. Alternative Minimum Tax (AMT) is a complex part of the federal tax code many taxpayers never worry about. Generally, you do not pay unless you have high income (>$250K) or high deductions. It also depends on the state you’re in, since your state taxes can significantly affect your deductions. Confusingly, if you are affected, AMT tax rates are usually at 26% or 28% marginal tax rate, but effectively is 35% for some ranges, meaning it is higher than ordinary income tax for some incomes and lower for others. AMT rules are so complicated you often need professional tax help if they might apply to you. The IRS’s AMT Assistant might also help. ❗ AMT is important to understand because exercising incentive stock options can trigger AMT. In some cases a lot of AMT, even when you haven’t sold the stock and have no money to pay. Mais sobre isso abaixo. 🔹 Section 1202 of the Internal Revenue Code provides a special tax break for qualified small business stock held for more than five years. Currently, this tax break is a 100% exclusion from income for up to $10M in gain. There are also special rules that enable you to rollover gain on qualified small business stock you have held for less than five years. Stock received on the exercise of options can qualify for the Section 1202 stock benefit.
Now we’ve covered the basic concepts of equity and taxes, here are some messy details of how they interact.
As already discussed, employees can get restricted stock, stock options, or RSUs. The tax consequences for each of these is dramatically different.
Generally, restricted stock is taxed when it vests as ordinary income. Of course, if the stock is in a startup with low value, this may not result in very much tax being owed. But if it is years later from when the stock was first granted, and the company is worth a lot, the taxes owed could be significant. 🔹 However, the Internal Revenue Code offers an alternative, called a Section 83(b) election , which is an election to be taxed on the receipt of the property, even though you might not get to keep it since it has not vested. The presumption of the tax law would normally be that you do not owe tax until property you have received vests. With a Section 83(b) election, you’re telling the IRS you want to pay taxes early, on stock that is not vested yet, instead of paying as it vests. The election can potentially reduce your tax significantly: If the shares go up in value, the taxes owed on vesting might be a lot greater than the taxes owed at the time of receipt. An 83(b) election isn’t guaranteed to reduce your taxes, of course. For example, the value of the stock may not increase. And if you leave the company before you vest, you don't get the taxes you’ve paid back. ❗ You must file the 83(b) election yourself with the IRS within 30 days of the grant or exercise, or the opportunity is irrevocably lost. 🔸 Section 83(b) elections cannot be made on the receipt of a stock option. They can only be made on the receipt of actual shares of stock. If you receive an immediately exercisable stock option (meaning, an option that is early exercisable, when it is not vested), and you exercise the option before the option vests, you can make an 83(b) election on your receipt of the shares on exercise. Section 83(b) elections do not apply to vested shares; it only applies to stock that is not yet vested. Thus, if you receive options that are not early exercisable, which you cannot exercise until vested — then an 83(b) election would not apply. 🔹 Founders and very early employees will almost always want to do an 83(b) election upon the receipt of unvested shares, since the stock value is probably low. If the value is really low, and the taxes owed are not that great, you can make the election without having to pay much tax and start your capital gains holding period on the shares.
When stock vests, or you exercise an option, the IRS will consider what the fair market value (FMV) of the stock is when determining the tax you owe. Of course, if no one is buying and selling stock, as is the case in most startups, then its value isn’t obvious. For the IRS to evaluate how much stock is worth, it uses what is known as the 409A valuation of the company. The startup pays for an appraisal that sets the 409A, typically annually or after events like fundraising. In practice, this number could be low or high. 🔹 A company wants the 409A to be low, so that employees make more off options, but not low enough the IRS won’t consider it reasonable. Typically, the 409A is much less than what investors pay for preferred stock; for example, it might be only a third of the preferred stock price.
Startups generally decide to give ISOs or NSOs depending on the legal advice they get. It’s rarely up to you which you get, so you need to know about both. There are pros and cons of each from both the recipient’s and the company’s perspective. 🔸 ISOs cannot be granted to non-employees (i. e., independent contractors). ❗ 🔹 When you owe tax: When you get stock options and are considering if and when to exercise them, you need to think about the taxes. In principle, you need to think about taxes (1) at time of grant; (2) at time of exercise; and (3) at time of sale. These events trigger ordinary tax (high), long-term capital gains (low), or AMT (possibly high) taxes in different ways for NSOs and ISOs. The taxes will depend on the gain (sometimes called spread) between the strike price and the FMV, known as the bargain element , and the gain on the sale. This isn’t the whole story, but from an employee’s point of view, the key differences are (see here, here, here, and here): Restricted stock awards : Assuming vesting, you pay full taxes early with the 83(b) or at vesting: At grant: If 83(b) election filed, ordinary tax on FMV None otherwise At vesting: None if 83(b) election filed Ordinary tax on FMV of vested portion otherwise At sale: Long-term capital gains tax on gain if held for 1 year past exercise Ordinary tax otherwise (including immediate sale) NSOs : You pay full taxes at exercise, and the sale is like any investment gain: At grant and vesting: No tax if granted at FMV At exercise: Ordinary tax on the bargain element Income and employment tax withholding on paycheck At sale: Long-term capital gains tax on gain if held for 1 year past exercise Ordinary tax otherwise (including immediate sale) ISOs: You might pay less tax at exercise, but it’s complicated: At grant and vesting: No tax if granted at FMV At exercise: AMT tax event on the bargain element; no ordinary or capital gains tax No income or employment tax withholding on paycheck At sale: Long-term capital gains if held for 1 year past exercise and 2 years past grant date Ordinary tax otherwise (including immediate sale) ❗ The AMT trap: If you have received an ISO, if you exercise it may unexpectedly trigger a big AMT bill — even before you actually make any money on a sale! To make matters worse, you probably can’t sell the stock to pay the tax bill. This infamous problem (more details) has trapped many employees and bankrupted people during past dot-com busts. Now more people know about it, but it’s still a significant obstacle to plan around. (Note that if your AMT is for events prior to 2008, you’re off the hook.) 🔹 If you are granted ISOs or NSOs at a low strike price, and the bargain element is zero, then you may be able to exercise at a reasonable price without triggering taxes at all. So assuming the company allows it, it makes sense to early exercise immediately (buying most or all of the shares, even though they’re not vested yet) and simultaneously file an 83(b) election. 🔸 ☝️ Section 83(b) elections are elections to be taxed on the receipt of property even though you might have to forfeit or give back the property to the company. You can make an election on the receipt of stock, but you cannot make the election on the receipt of an option or an RSU because options and RSUs are not considered property for purposes of Section 83(b). 🔸 🌪 ISOs are often preferred by startups as it’s supposed to be better for an employee from a tax perspective. This assumes that (1) AMT won’t be triggered and (2) you’ll get low long-term capital gains rate by holding the stock for the appropriate holding periods. However, often you either run afoul of the AMT trap, or don’t hold the stock long enough with the complicated 1 year + 2 year requirement, or the spread at exercise is zero or small, so the difference wouldn’t matter anyway. NSOs do have a slightly higher tax because of the employment taxes. Overall, it’s not clear the ISO is that much better for employees, so manypeople argue for NSOs instead. 🔸 ☝️ Even more confusingly, ISOs can make it harder to meet the long-term capital gains holding period. Many people expect early exercise together with an 83(b) election will help them hold the stock longer, to qualify for long-term capital gains. While this is true for NSOs, there is a murky part of the rules on ISOs that implies that even with an 83(b) election, the capital gain holding period does not begin until the shares actually vest. So, if you want to immediately exercise an option and file a Section 83(b) election, and you might have liquidity soon, it’s better if you can have it be an NSO.
If you are awarded RSUs, each unit represents one share of stock that you will be given when the units vest. 🔸 When you receive your shares you are taxed on their value at that time. If you are an employee, this means you may have to write a check to the company to cover your income and employment tax withholding. Often, for U. S. employees, companies will withhold the tax in the form of shares such that no action is required by the employee at vesting time. If you receive an RSU when the stock is of little value, you cannot elect to be taxed on the value of that stock when you receive the RSU — you pay taxes at vesting time, based on the shares’ value at that time. 🔸 There is a combination of big problems for RSUs in private companies: You will owe tax when you receive the shares — even though they are illiquid. You can't minimize the impact of an increase in value of the underlying shares between the date you receive the RSU and the date it is settled. If you are an employee you will have to write a check to the company to satisfy your income and employment tax withholding. 🔸 RSUs are less attractive than options from a tax point of view because you cannot make an 83(b) election with respect to an RSU. By contrast, if you receive a stock option, as long as it is priced at fair market value, you will have no income upon receipt of the options, and your income tax and employment tax consequences will be deferred until you exercise — an event under your control for the most part. Taxation summary (compare with above): At grant: No tax At vesting/delivery: Ordinary tax on current share value At sale: Long-term capital gains tax on gain if held for 1 year past exercise Ordinary tax otherwise (including immediate sale)
This section is a quick refresher on how companies raise funding and grow, as this is critical to understanding the value of a company and what equity in a company is worth.
The stage of a startup is largely reflected in how much funding it has raised. Very roughly, typical levels are: Bootstrapped : No funding — founders are figuring out what to build or starting to build with their own time or resources. Series Seed ($250K to $2 million): Figure out the product and market. Series A ($2 to $15 million): Scaling product and making the business model work. Series B (tens of millions): Scaling business. Series C, D, E, etc. (tens to hundreds of millions): Continued scaling of business. 🔸 Most startups don’t get far. Very roughly, if you look at angel investments, more than half of investments fail, one in 3 are small successes (1X to 5X returns), one in 8 are big successes (5X to 30x), and one in 20 are huge successes (30X+). 🔸 Each stage reflects the removal of risk and increased dilution . For this reason, the equity team members get is higher in the earlier stages (starting with founders) and increasingly lower as a company matures. (See the picture above.) 🔹 It is critical to understand risk and dilution to know the possible future value of equity. This article from Leo Polovets gives a good overview. 🔹 If you’re talking with a startup, there are lots of questions to ask in order to assess the state of the company's business. Startups are legitimately careful about sharing financial information, so you may not get full answers to all of these, but you should at least ask: How much money has the company raised (including in how many rounds, and when)? O que a última rodada valorizou a empresa? Will it likely raise more capital soon? Quanto tempo durará o seu financiamento atual? (This will likely be given at current burn rate, i. e. no additional hiring.) What is the hiring plan? (How many people over what time frame?) What is the revenue now, if any? What are the revenue goals/projections? Where do you see this company in 1 year and 5 years? Revenue? Employees? Market position?
It takes quite a bit of know-how to be able discuss, understand, and evaluate equity compensation offers. If you don’t yet have an offer, see the sections below on evaluating a company and negotiation, as well.
We all know the value of cash. But determining the value of equity is hard, because you have to figure out or make guesses about several things: Stock value : The value the company will have in the future, which depends on the value of the business, and the number of shares you own. Vesting and liquidity : When you actually will own the shares and when you’ll be able to sell them. Tax : Both purchase and sale of stock can require that you pay taxes — sometimes very large amounts. Also, there are several kinds of taxes: Income, capital gains, and AMT. 🔹 Know the percentage: Knowing how many shares of stock or stock options is meaningless unless you know the number of outstanding shares. What matters is the percentage of the company the shares represent. Typically it would be in percent or basis points (hundredths of a percent). Some companies don’t volunteer this information unless you specifically ask, but it’s always a fair question, since without it, the offer of shares is almost meaningless. You need to understand the type of stock grant or stock option in detail, and what it means for your taxes, to know the likely value. In some cases, high taxes may prevent you from exercising, if you can’t sell the stock, so you could effectively be forced to walk away from the stock if you can't afford to exercise. ❗ If you do get an offer, you need to understand the value of the equity component. You need quite a bit of information to figure this out, and should just ask. If the company trusts you enough to be giving you an offer, and still doesn’t want to answer these questions about your offer, it’s a warning sign. (There are lots of otherarticles with more details about questions like this.) 🔹 Information that will help you weigh the offer might be: What percentage of the company do the shares represent? What set of shares was used to compute that percentage (i. e. is this really the percentage of all shares, or some subset)? What did the last round value the company at (i. e. the preferred share price times the total outstanding shares)? What is the most recent 409A valuation? When was it done, and will it be done again soon? Você permite o exercício antecipado das minhas opções? Are all employees on the same vesting schedule? Is there any acceleration of my vesting if the company is acquired? Do you have a policy regarding follow-on stock grants? Does the company have any repurchase right to vested shares? Finally, consider the common scenarios for exercising options, discussed below.
If you don’t yet have an offer, it’s important to negotiate firmly and fairly to get a good one. A guide like this can’t give you personal advice on what a reasonable offer is, as it depends greatly on your skills, the marketplace of candidates, what other offers you have, what the company can pay, what other candidates the company has found, and the company’s needs and situation. However, this section covers some basics of what to expect with offers, and tips on negotiating an offer.
🔹 Most companies, especially well-established ones, give roughly equal treatment to candidates. But even so, harder negotiators — or ones that are more sophisticated — can often get better offers. Many companies will give some flexibility during negotiations, letting you indicate whether you prefer higher salary or higher equity. Candidates with competing offers almost always have more leverage and get better offers. Salaries at startups are often a bit below what you’d get at an established company, since early on, cash is at a premium. For very early stage startups, risk is higher, offers can be more highly variable, and variation among companies will be greater, particularly on equity. The dominant factors determining equity are what funding stage a company is at, and your role. If no funding has been raised, large equity may be needed to get early team members to work for very little or for free. Once significant funding of an A round is in place, most people will take typical or moderately discounted salaries. Startups with seed funding lie somewhere in between.
🔹 🌪 There are no hard and fast rules, but for post-series A startups in Silicon Valley , this table, based on the one by Babak Nivi, gives rough ballparks equity levels that many think are reasonable. These would usually be restricted stock or stock options with standard 4-year vesting schedule. These apply if each of these roles were hired just after an A round and are also being paid a salary (i. e. not already founders or hired before the A round). The upper ranges would be for highly desired candidates with strong track records. CEO: 5–10% COO: 2–5% VP: 1–2% Independent board member: 1% Director: 0.4–1.25% Lead Engineer 0.5–1% Senior Engineer: 0.33–0.66% Manager or Junior Engineer: 0.2–0.33% For post-series B startups , equity numbers would be much lower. How much lower will depend significantly on size of the team and valuation of the company. Seed-funded startups would be higher than the above numbers, sometimes much higher if there is little funding. 🔹 One of the best sources of information about what is reasonable for a given company and candidate is to look at offers from companies with similar profiles on AngelList. A 2018 survey of AngelList job postings by Leo Polovets has excellent summary of equity levels for the first few dozen hires at these early-stage startups. For engineers in Silicon Valley, the highest (not typical) equity levels were: Hire #1: up to 2%–3% Hires #2 through #5: up to 1%–2% Hires #6 and #7: up to 0.5%–1% Hires #8 through #14: up to 0.4%–0.8% Hires #15 through #19: up to 0.3%–0.7% Hires #21 through #27: up to 0.25%–0.6% Hires #28 through #34: up to 0.25%–0.5% Keep in mind much of the above information is heavily biased toward early-stage Silicon Valley tech startups, not companies as a whole across the country.
Companies will always ask you what you want for compensation. And you should always be cautious about answering. If you name a number that you’ll accept, you can be fairly sure the company won’t exceed it, at least not by much. Some argue that a good tactic in negotiating is to start higher than you will be willing to accept, so that the other party can “win” by negotiating you down a little bit. Keep in mind, this is just a suggested tactic by some, and not a hard and fast rule. If you are inexperienced and are unsure what a fair offer should look like, avoid saying exactly what you want for compensation very early in discussions. It’s common for hiring managers or recruiters to ask this early in the process, just to take advantage of candidates that don’t have a good sense of their own worth. Tell them you want to focus on the opportunity as a whole and your ability to contribute before discussing numbers. Ask them to give you a fair offer once they understand your worth to the company. If you are experienced and know your value, it’s often in your interest to state what sort of compensation and role you are looking for to anchor expectations. You might even share your expectations early in the process, so you don’t waste each other’s time. Discuss what your compensation might be like in the future. No one can promise you future equity, salary, or bonuses, but it should be possible to agree what they will look like if you have outstanding performance and the company has money. If you’re coming from an established company to a startup, you may be asked to take a salary cut. This is reasonable, but it’s wise to discuss explicitly how much it is, and when that will be changed up front. For example, you might take 25% below your previous salary, but there can be an agreement that this will be corrected if your performance is strong and the company gets funding. 🔹 Always negotiate non-compensation aspects before agreeing to an offer. If you want a specific role, title, opportunity, visa sponsorship, special treatment (like working from home), or have timing constraints about when you can join, negotiate these early, not late in the process. ❗ Get all agreements in writing, if they are not in your offer letter. 🔹 If you’re going to be a very early employee, consider asking for a restricted stock grant instead of stock options, and a cash bonus equal to the tax on those options. This costs the company a little extra paperwork (legal costs), but then you won’t have to pay to exercise, and then if you file an 83(b) election, you’re simplifying life, eliminating the AMT issues of ISOs and maximizing chances of qualifying for long-term capital gains tax. Getting multiple offers is always in your interest. If you have competing offers, sharing the competing offers can be helpful, if they are good. However, dragging out negotiations excessively so you can “shop around” an offer to other companies is considered bad form by some people, so it’s thoughtful to be judicious, and try to time things at once to the extent possible. Reneging on offers: Do not accept an offer verbally or in writing unless you’re ready to stand by your word. In practice, occasionally people do accept an offer and then renege. In the United States, this is considered a very bad thing to do, especially if it put the company in a difficult position (e. g. they declined another key candidate based on your acceptance), and may hurt your reputation in unexpected ways later. Robby Grossman gives a good overview of equity compensation and negotiation suggestions.
Once you have stock options, what are the possible scenarios for exercise? Generally, you should consider these possibilities: Exercise and hold : You can write the company a check and pay any taxes on the spread. You are then a stockholder, with a stock certificate that may have value in the future. As discussed above, you may do this: “Early”, even immediately upon grant Before vesting (if early exercise is available to you) Sometime after vesting, or - After leaving the company, as long as the exercise window is open. 🔸 Recall that often the window closes soon after you leave a company, e. g. 90 days after termination. Wait until acquisition : If the company is acquired for a large multiple of the exercise price, you may then use your options to buy valuable stock. However, as discussed, your shares could be worth next to nothing unless the sale price exceeds the liquidation overhang, since preferred stock is paid up first. 🔸 Secondary market : As discussed above, in some cases it’s possible to exercise and sell the stock in a private company directly to a private party. But this generally requires some cooperation from the company and is not something you can always count on. Cashless exercise : In the event of an IPO, a broker can allow you to exercise all of your vested options and immediately sell a portion of them into the public market, removing the need for cash up front to exercise and pay taxes. 🔹 Note that some of these scenarios may require significant cash up front, so it makes sense to do the math early. If you are in a tight spot, where you may lose valuable options altogether because you don’t have the cash to exercise, it’s worth exploring each of the scenarios above, or combinations, such exercising and then selling a portion to pay taxes. In addition, there are a few funds or individual investors who may be able to front you the cash to exercise or pay taxes in return for an agreement to share profits. Alex MacCaw’s guide includes a few more detailed example scenarios.
This section covers a few kinds of documents you’re likely to see. It’s not exhaustive, as titles and details vary.
When you are considering your offer from the company, make sure you have all of the documents. These should be: Your offer letter, which will detail salary, benefits, and equity compensation. An Employee Innovations Agreement or Proprietary Information and Inventions Assignment Agreement or similar, which concerns intellectual property. In addition, if you have equity compensation, at some point — possibly weeks or months after you’ve joined — you should get a Summary of Stock Grant or Notice of Stock Option Grant, or similar document, detailing your grant of stock or options, along with all details such as number of shares, type of options, grant date, vesting commencement date, and vesting schedule. It will come with several other documents, which may be exhibits to that agreement: Stock Option Agreement Stock Plan (sometimes called a Stock Option Plan, or Stock Award Plan, or Equity Incentive Plan) Code Section 409A Waiver and Release (sometimes this is part of the Stock Option Agreement) If you are exercising your options you should also see paperwork to assist with that purchase: Exercise Agreement. Instructions and template for early exercise and 83(b) election, if applicable. End of year tax documents 📥 You should receive a form 3921 or 3922 from your company if you exercised ISO options during the year.
These are scenarios that can be very costly for you if you aren’t aware of them.
❗ Do not accept an offer of stock or shares without also asking for the exact number of total shares (or, equivalently, getting the exact percentage of the company those shares represent). It’s quite common for some companies to give offers of stock or options and tell you only the number of shares. Without the percentage, the number of shares is meaningless. Not telling you is a deeply unfair practice. A company that refuses to tell you even when you’re ready to sign an offer is likely giving you a very poor deal. 🔸 If you’re looking at an offer, work out whether you can and should early exercise, and what the cost to exercise and tax will be, before accepting the offer. ❗ If you join a company right as it raises a new round, and don’t have the chance to exercise right away, they may potentially issue you the options with the low strike price, but the 409A of the stock will have gone up. This means you won’t be able to early exercise without a large tax bill. In fact, it might not be financially feasible for you to exercise at all. 🔸 Vesting starts on a vesting commencement date. Sometimes stock option paperwork won’t reach you for months after you join a company, since it needs to be written by the lawyers and approved by the board of directors. This usually isn’t a big problem, but do discuss it to make sure the vesting commencement date will reflect the true start date of when you joined the company, not when the stock option is granted. 🔸 If you’re going to early exercise, consider it like any investment. Don’t believe every projection about the value of the company you hear. Founders will tell you the best-case scenario. Remember, most startups fail. Do your research and ask others’ opinions about likely outcomes for the company. ❗ It may not be common, but some companies retain a right to repurchase (take back) vested shares. It’s simple enough to ask, “Does the company have any repurchase right to vested shares?” (Note repurchasing unvested shares that were purchased via early exercise is different, and helps you). If you don't want to ask, the fair market value repurchase right should be included in the documents you are being asked to sign or acknowledge that you have read and understand. (Skype had a complexcontroversy related to this). You might find a repurchase right for vested shares in the Plan itself, the Stock Option Agreement, the Exercise Agreement, the Bylaws, the Certificate of Incorporation or any other stockholder agreement.
Here are some costly, common errors to watch out for on the taxation side.
❗ If you are going to file an 83(b) election, it must be within 30 days of stock grant or option exercise. Note that often law firms will take a while to send you papers, so you might only have a week or two. If you miss this window, it could potentially have giant tax consequences, and is essentially an irrevocable mistake — it’s one deadline the IRS won’t extend. When you file, get documentation of from the post office, delivery confirmation, and include a self-addressed stamped envelope for the IRS to send you a return receipt. (Some people are so concerned about this they even ask a friend to go with them to the post office as a witness!) ❗ One of the most serious tax-related mistakes you can make is to exercise ISOs without first knowing the impact on your AMT obligations. If there is a large spread between strike price and 409A value, you are potentially on the hook for a very large tax bill — even if you can’t sell the stock. This has pushed people into bankruptcy. It also caused Congress to grant a one time forgiveness, but the odds of that happening again are very low. Understand this topic and talk to a professional if you exercise ISOs. ❗ If you exercise your options, and your income had been consulting, not employment (1099, not W-2), you will be subject to the self-employment tax in addition to income tax. Self employment taxes consist of both the employer and the employee side of FICA. Meaning, you will owe the Social Security tax component, 6.2%, up to the FICA wage base, and you will owe the Hospital Insurance component, 2.9% on all of the income. 🔸 Thoughtfully decide when to exercise options. As discussed, if you wait until the company is doing really well, or when you are leaving, it can have serious downsides.
David Weekly, An Introduction to Stock & Options for the Tech Entrepreneur or Startup Employee Anonymous, What I Wish I'd Known About Equity Before Joining A Unicorn Investopedia, Employee Stock Options: Definitions and Key Concepts Dan Shapiro, Vesting is a hack Guy Kawasaki, Nine Questions to Ask a Startup Alex MacCaw, An Engineer’s Guide to Stock Options Robby Grossman, Negotiating Your Startup Job Offer Julia Evans, Things you should know about stock options before negotiating an offer Joe Wallin, RSUs vs. Restricted Stock vs. Stock Options Joshua Levy and Joe Wallin, The Problem With Immediately Exercisable ISOs Barry Kramer, The Tax Law that is (Unintentionally) Hammering Silicon Valley Employees Startup Law Blog, Incentive Stock Options vs. Nonqualified Stock Options Startup Law Blog, Top 6 Reasons To Grant NQOs Over ISOs Investopedia, How Restricted Stock And RSUs Are Taxed Investopedia, Introduction To Incentive Stock Options Forbes, Ten Tax Tips For Stock Options Wealthfront, When Should You Exercise Your Stock Options? Wealthfront, The 14 Crucial Questions about Stock Options Leo Polovets, Valuing Employee Options Leo Polovets, Analyzing AngelList Job Postings, Part 2: Salary and Equity Benchmarks Inc, 5 Questions You Should Ask Before Accepting a Startup Job Offer GigaOm, 5 Mistakes You Can’t Afford to Make with Stock Options Wealthfront, How Do Stock Options and RSUs Differ? Mary Russell, Startup Equity Standards: A Guide for Employees Mary Russell, Can the Company Take Back My Vested Shares? Fairmark, AMT and Long-Term Capital Gain NCEO, Stock Options and the Alternative Minimum Tax (AMT) Accelerated Vesting, What Is An 83(b) Election and When Do I Make It? Fenwick, Section 409A Valuations and Stock Option Grants for Start-up Technology and Life Science Companies Venture Hacks, How to make a cap table VentureBeat, Beware the trappings of liquidation preference Orrick, Startup Forms: Equity Compensation Matthew Bartus, Option Grants: Fully Diluted or Issued and Outstanding Babak Nivi, The Option Pool Shuffle (and table of equity ranges) 🔨 TLDR Stock Options and OwnYourVenture are simulators illustrating equity calculations and dilution.
This guide and all associated comments and discussion do not constitute legal or tax advice in any respect. Nenhum leitor deve agir ou abster-se de atuar com base em qualquer informação aqui apresentada, sem solicitar o conselho da jurisdição relevante. The author(s) expressly disclaim all liability in respect of any actions taken or not taken based on any contents of this guide or associated content.
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