Hi, I work for a small silicon valley startup that offered me 10,000 stocks options across 4 years, long story short, I plan to move to a different startup early January 2019, so far I've vested ~5000 and I was wondering how it works? since stock options is a taboo topic in the company and nobody really want to or knows how it works. - A friend of mine told me the stocks are not mine and I need to paid in the next 30 days (Carta says exercise price is $0.40), that means I have to pay $2000? for basically just air? - Another one told me paying to a company while leaving is stupid, so what should happen is I need to ask what is the current stock option value (based on the last valuation) and the company should pay me the difference. As I mention I think nobody (in the company) really understand how it works and I will appreciate if somebody with more experience in the topic can explain the whole thing since I don't want to get f#$cked. Some information from carta: type: NSO Original grant: 10000 Exercisable: 5000 Exercise Price: $0.40 Execerise periods: voluntary / involuntary termination, 3 months.
Did you keep a copy of the legal paperwork you signed? Literally nobody on blind can give you an answer to this question; you have to read the answer in your documents
I have some documents on carta.com I can download, everything was through the carta platform =/, I'll read those in more detail.
You can pay $2000 to exercise your 5000 shares and they become yours. There might be a tax liability but prob not if your startup sucks and makes no money, no recent funding. If you walk without exercising company owes you nothing (unless a contract states otherwise)
We are a 2 years old startup, we only had 1 round of founding so far with a total of ~$6m usd. Sorry but what does it mean when the shares become mine? its going to be like money in the future? if the company got acquired I got a corresponding part based on the amount of shares I own?, thanks.
Worst case you’re out $2000 (likely outcome). Best case you walked away from the next faang and you’re a multimillionaire.
This is specific to how your contract is written. To exercise you do pay if they're options instead of RSUs. Not reading these documents is how people get screwed, because some requires exercise within certain time frame even after vest and still with company. Figure out 409a valuation. If higher than what you joined at, get ready to pay large amount of taxes on "gains" because valuation increased.
I am one of the first employees, so far we had only 1 founding round (~$6m usd), is that the valuation?, there was a seed founding before that but it doesn't show on Crunchbase.
funding typically sets the new valuation. unless your company was doing terribly the valuation with the $6m investment is likely greater than the price on your grant. you should be able to ask your finance person what the current valuation is.
Be careful of the tax consequences of exercising your options. If each stock is worth $100.4 then you just realized $100 x 5000 = $500K capital gains and you will have to pay a lot of taxes on those gains.
I'm surprised they give NSOs to employees. Some thoughts regarding your situation: - you will have to pay $0.40 x 5000 = $2000 to exercise your options. Once they are exercised, you get a stock certificate that says you now own 5000 common stocks. - you should check what the current fair market value of your company's stock is. The higher it is, the higher tax you'll pay. Let's say the current value is $2. You then have realized a profit of $1.6 per share (on paper) at the time of exercise. In this case, 1.6 x 5000 = $8000 gets added to your regular income and you pay tax on it. - if you think the company is doing very well and you're bullish on the long term prospects, you should consider exercising your options. - it is worth hiring a tax person to look at your situation and recommend what's best for you
Is the new trump tax different regarding the option exercise? I hear no loner need to pay tax when excercise but only pay tax whenyou sell the common stocks. Any news? Seems different now
As of which tax year? For 2018, if you exercise ISOs, you don't pay regular income tax. Your income is instead counted towards AMT calculations. For NSOs, there is no preferential tax treatment. I'm not aware of any changes for 2019.
Sad that you joined a company in the business of equity management and no one knows anything about equity 🤔
How the hell did you find this post
Because butt cloud
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Just walk away. It’s not worth bothering. By the way how would you have reported your TC before/after realizing the stock component is essentially worthless? Genuinely curious given the Various assumptions people make when reporting their TC