I want to know how TC should be calculated when at a startup. Here's an example: Salary: $100,000 Equity: 40,000 shares (let's say strike is $1, valued at $2) Is TC calculated as: 1) $100,000 + $20,000 ($2 value * 10,000 shares vested/year = $120,000? 2) $100,000 + $10,000 (($2 value - $1 cost) * 10,000 shares vested/year = $110,000? 3) Another way? Disclaimer: these aren't real numbers, just an example for ease of calculation
Could you sell the shares at $2? If not, consider it $100k max. You may lose money buying the 40k shares.
3) TC: 100k Shares don’t matter unless you get bought out or go public. And I don’t think Affirm is anywhere close to being public(?). As for strike price, if you do go public, it would be the $value at grant-$1 per share.
Exactly this
Large pre-IPO companies usually have “tender offers” once a year. You can usually liquidate a fair bit of your stock that way, at FMV.
Startups so rarely go public that you should value shares at near $0, if not $0 exactly
Another way ... Use https://comp.data.frontapp.com to calculate TC based on exit assumptions. Obviously, it may not happens, but it gives an idea. You’ll need the fully diluted number of shares also.
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