VCs and founders should be ashamed of the policies that force employees to buy options within 90 days or get nothing upon exit or termination.
What is the alternative? Do you think you should just forever have the option? Then no one would ever invest...
They shouldn’t offer equity beyond what the cap table can support. Vesting schedule is the retention tool - if they want to make sure to keep people with equity then adjust the vesting schedule but what’s vested should be cashless exercise
Pinterest gave their employees 10 years to exercise vested options. Seems like they’re doing ok.
100% agree. They could extend it up to 10 years and would still be in compliance with the law. 90 days is a choice.
What law?
Tax law says ISO options must be exercised within 90 days of termination but some companies such as Pinterest convert ISO to NSO after 90 days post termination and you can exercise the vested options for up to 7 years after that. But taxes are due on the spread as ordinary income at exercise time with NSOs.
Negotiate that upfront before you join the startup
Absolutely zero startups will negotiate that.
This is a thing now? Damn. What kind are of strike price are we talking about?
This is the situation I’m now negotiating. It’s stupid bc they won’t budge and as a result I’m actively seeking work elsewhere bc to me my options mean nothing with this stipulation
Smart move
Run, don’t walk away. Seems like a scheme to get you to help fund the company.
Is your situation not wanting to pay for the options that might be worthless or not being able to afford the AMT on the paper gains?
Yes. But it’s just a horrible policy overall and unfair to workers.
Both
So unfair and so short sighted bc workers are getting savvier about this stuff
A company I worked for had a VC propose that we revise the employee stock agreement claw back exercised vested from any employee who departs shares because “we are all in this together and anyone who leaves doesn’t deserve to profit from the work of others.” Think about how surreal that is.
That’s the position of my company now. Nuts
True. have to buy their option is brutal.