Ipo before vesting

Samsung / Eng
ramen 🍜

Samsung Eng

Frontend Engineers
ramen 🍜more
Jul 14, 2017 9 Comments

I joined a company around 1 mo ago. It looks like they will go public within a year.
What will happen to my unvested option? Am I screwed?


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TOP 9 Comments
  • Airbnb Grjx68
    Nothing happens to your options, you can exercise them when they vest regardless of if the company is public or not. I recommend reading the following open guide on equity: https://github.com/jlevy/og-equity-compensation
    Jul 14, 2017 0
  • Microsoft ESnX24
    No. They are still options you can exercise when they vest.
    Jul 14, 2017 0
  • Oracle minato
    Which startup?
    Jul 14, 2017 0
  • Citrix Systems / Eng xTLi37
    it depends. some places will do an early vesting for people that are there a short time for an ipo but that is more common in a buy out. that can sometimes be just a one year accelerated schedule for everyone. as some have pointed out if the ipo flops and your strike price is higher than the current traded price your underwater and those shares aren't worth crap. it doesn't happen so much as during the dot com crash. what will likely happen is your strike price will be below what it's trading at and you can sell for a profit when you vest. that all said the place you can get fucked is taxes. first try not to plan to sell immediately when you vest. if you can hold the shares for like 18 months or two years you pay long term Capitol gains tax ala 15% before that it if just normal income and depending on your tax situation could be as high as 45% between federal and state. some places will let you early exercise which basically means you buy the shares before you vest to start that long term capitol gains clock ticking down. really you need to speak to an accountant. not fucking h&r block a real accountant cpa that can help you plan to reduce your tax liability.
    Jul 15, 2017 1
    • New / Eng mochaccino
      Many people here are likely not old enough to remember the dot com bubble where people lost six and seven figures to AMT after deciding to hold for long term capital gains. There's a lot to be said for same day sales with options. Take the money and run...
      Jul 23, 2017
  • Databricks blabdhhd
    It really depends on the ipo result. If the ipo price dips under your options's strike price then technically your options are worthless.
    Jul 15, 2017 0
  • Facebook / Eng instandidl
    I wonder how many people sign employment contracts without understanding the terms of their compensation.
    Jul 17, 2017 1
    • Intercom / Product ozJW66
      A lot. It's worse than the Terms of Service problem IMO
      Aug 1, 2017
  • TuneIn azn
    it's good and bad for you, on one hand your options will be liquid as soon as they are vested. on the other hand, unless stock price goes up significantly during IPO, the options would not worth much.

    Normally very late stage startups tend to offer RSUs, because options are worth very little for new hires.
    Jul 14, 2017 0