Hot answers tagged stock-options
6
Of note: an experienced large company person may not have the correct skillset to run a startup. I know some may disagree, but it is one thing to have a staff / secretary / expense account, and quite another to have to sweep the floors before you leave the building every night (because no one else will do it).
I would take a look at the vesting - any ...
5
I would expect them to pay about 80k. Stock is a red herring.
First off there is a 90% chance that it is worth 0 dollars in the long run.
Second unless they are giving you stock regularly then stock is a sign on bonus not pay.
Third whatever you agree the stock to be worth, consider you won't be able to sell that stock for several years. Think of ...
5
So there's no strike price, is there a vesting schedule? It may be that you were automatically granted them without having to do anything.. if that's the case, I'd wager there are tax implications.
Regardless, usually when a company is acquired, the acquirer wants to own 100%. When it comes down to it, each of you has a (small?) claim on a chunk of the ...
4
For perspective, consider a job offer where you'll be paid 100,000 per year, but you aren't allowed to know which currency it'll be in. GBP is pretty good, but ZWD not so much.
It would be great to know why they feel the need to keep this secret and without a really good reason, I'd consider this a red flag. You have to assume that the shares are worthless ...
4
If you're paid a competitive salary then any equity you get is a bonus.
It sounds quite simple, you are just working a job that you get paid for.
The reason people give equity is to compensate lack of salary. If the founder wants to pay you instead of giving equity, well I don't see a problem with that.
3
This is a big red flag.
They don't think you're important enough to take your concerns seriously
They don't share company information and are more likely than usual to hide things from you in the future
Other employees likely didn't get this information either, and perhaps aren't sophisticated enough to care; great candidates may be likely to join this ...
2
Issuing alone is not a problem, but there are tax complications involved. Your corporation is required to withhold on the employee's stock option compensation upon exercise depending on whether your company is "engaged in trade or business within the United States" (ETBUS), which it presumably is.
Employers generally withhold on portion of spread allocable ...
2
Percent means nothing, value means everything.
You're right on both fronts. You're being offered 0.25% NOW, which will likely turn into 0.04% over time. The idea is, though, that by the time the company has issued enough stock to dilute your PERCENTAGE to 0.04%, that 0.04% is worth far more than the original 0.25% of stock.
Example:
You're offered 0.25% ...
2
There are so many variables here, that answering what is market etc. is a waste.
Where is the job located?
How many years of experience in what skills do you have?
What previous companies you have worked for?
What level company is hiring you into, how many people you may mentor/manage?
How much money company has raised in how many rounds?
How much stock ...
1
You got $10k. Not $1. They are taking a big risk. There is a time limit so I don't see the problem.
You can walk away from it - that's your choice.
Worst case scenario for you is that you have to give up 1% of your company after it is worth billions.
Is that a bad scenario?
Keep taking a 0 off the end of the valuation. Are there ANY scenarios ...
1
That sort of arrangement is actually pretty typical from universities, but it usually happens in licensing deals: "We give you this technology, and you give us an undiluted 2% of your company until X happens." And, 'X' is usually something like the passage of time, an equity round of $5M or more, etc....
It's not that onerous if it's 1% of the common (or ...
1
While your reasoning is logical (make sure you accounted for the strike price), I'm not a fan of attaching a strict dollar value to options, particularly in a seed stage startup, where uncertainty is huge, and future dilution certain.
Considering the specifics of your role (first employee and core developer) there is margin to ask for more equity. How ...
1
+1 for rbwhitaker's comment. "...people have a natural tendency to underestimate the contributions of the people around them."
From your original post it does sound like you've had considerable influence on the product from a technical perspective. I would recommend reviewing your compensation and equity stake in the company. It would be strongly ...
1
If you're getting paid (especially if it's what you'd be worth in another company) you're definitely not at the founder level. This would put you in the category of early employee. For an early employee, 2% of the entire company does seem like it's within the range of reasonable, though I'd expect you'd see that vary somewhat, anywhere from 0% (that was me ...
1
A convertible note suggests that the company will consider your deferred compensation as a debt the company owes you. You would be in the same position as an investor who contributed cash to the company in exchange for a convertible note. Typically, a holder of debt is considered to be in a more favorable position than a holder of equity, because a creditor ...
1
Don't just think in terms of how much equity to give but also in terms of the vesting schedule.
You'll find countless questions on this site about startups that gave equity upfront and that ended up regretting it. My recommendation: agree upfront on an amount but then nothing actually starts vesting before a trial period of 6-12 months. I think a vesting ...
1
While you should probably talk to a lawyer to get a definitive answer, it looks like you don't have any grounds for complaints.
The grant date is the date of the actual grant, which in your case was a year after the hire. Playing with it may be very costly to the company - read about backdating and related backdating scandals in the past here.
1
Option pools are normally allocated at the start of the business. This means options exercised dilute all shares. It is not uncommon to authorize additional shares for an option pool which, when exercised, dilute all shares. And the first responder is correct that your scheme is flawed. Everyone should get diluted to set up the option pool.
1
You didn't mention if they're funded: that would obviously be a big determining factor in terms of the salary you can expect. You should ask them how much funding they raised and ask to see the financial projections: they should have a line item that shows "software developer". That's what they've budgeted.
Most likely, they will try to pay you less but ...
1
You probably will have to pay income tax in the US on the income. You'll need to get an ITIN and file a W8-BEN form with the payer. Check your own home country's tax treaty with the US for any provisions to override the default 30% withholding. These have to be mentioned on W8-BEN.
Also, worth mentioning, that depending on the corporate structure, having a ...
1
Answer is - depends. Best startups will do grants for the early team and options for the later team. Others will do straight options from day one.
I, personally, never worked with or in a startup where early team did not get grants. If founders won't do grants, I consider them unappreciative of their early team, which is often a failure in leadership.
1
So You are NOT paying this person who you think has the potential to run your company anything until it raises $500k. Why would he/she do that? Who is taking all the risk here. You or the prospective CEO. If he or she is as capable as you believe then they must be putting a hold on other avenues that they could travel.
The offering for a position that ...
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