<story><title>If you have startup stock options, check your option plan</title><url>http://blog.conspire.com/post/112700131803/if-you-have-startup-stock-options-check-your</url></story><parent_chain></parent_chain><comment><author>AndrewKemendo</author><text>I read a lot about how employees get screwed over with stock options, so what we decided to do was to just give employees vesting stock straight up as a buy through.&lt;p&gt;Basically the way this works is that we give new employees an up front lump sum in the amount of how much it costs to purchase the shares of the company. The employee then purchases those shares from us in line with a vesting agreement. All warrants and conversions are exactly the same as the founders shares.&lt;p&gt;This means that they pay tax on this purchase as regular income rather than capital gains up front with the money we give them for it. This prevents a heavy tax bill at conversion and allows them to retain their vested shares regardless of if they work for us or not after the first 12 month vesting period.&lt;p&gt;We calculated that the up front taxes are magnitudes cheaper in the long run because the increased valuation will cover those differences handily and there is no waiting period like there is with capital gains tax.&lt;p&gt;In the end though our intention was to make a simple way for our employees to actually own the stock we give them as compensation and it not be something that they can lose or be restructured easily. If a VC or acquisition wanted to restructure that away for employees then they would be forced to restructure everyone&amp;#x27;s, so we are all in.</text></comment>
<story><title>If you have startup stock options, check your option plan</title><url>http://blog.conspire.com/post/112700131803/if-you-have-startup-stock-options-check-your</url></story><parent_chain></parent_chain><comment><author>mcdoug</author><text>Why worry about stock options at all? There is a spectrum of outcomes. On one end the startup flops, or is bought for so little that your share, even if paid out, is close to 0. On the other end you have Google, Facebook, Instagram, etc. Companies where 0.5% is worth quite a bit of money. The problem is that the majority fall in-between, where your stock options will be worth nothing, yet the company will sell for a decent amount of money.&lt;p&gt;So what you should do is value the stock options at 0. If you have the spare cash, buy them as early as you can, but don&amp;#x27;t count them for anything. They are a lottery ticket that your company is the next Google and like any lottery ticket they are likely worth nothing. If the startup is offering to pay you half of what you&amp;#x27;d make elsewhere, waving stock options at you telling you they&amp;#x27;ll make you rich, consider if they just handed you a pile of lottery tickets and half a paycheck. If you&amp;#x27;d still take it (maybe you really like the people, or want to work in this field), go for it. Otherwise, they are just trying to get your for a far cheaper price than you&amp;#x27;d get elsewhere.</text></comment>