Question on stock option component of my offer letter

E*Trade / Product
🍍 Express

Go to company page E*Trade Product

🍍 Express
2d 8 Comments

Received an OL from a series D unicorn. The letter mentions that I “will be granted the opportunity to purchase up to 1,875 shares of Common Stock…at the FMV of the Company’s Common Stock as determined by the Board”

1. I was verbally told by the recruiter that the current value per share/preferred price is 170, but there is no mention of this on the OL itself.

2. I also understand that FMV=strike price, and that the strike price will be determined “after I join”

Are both points above normal?

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TOP 8 Comments
  • Wonder
    yzDT44

    Wonder

    yzDT44
    To elaborate: the company’s Board of Directors must approve all stock grants before they are given at the fair value at the time of the approval (otherwise there would be tax consequences).

    There is something called a 409a valuation which the company is required to get once a year (or again if a financing round occurs)

    The 409a is usually a discount to the preferred price investors paid in the last round (usually like 1/3rd the price on average but gets less of a discount as rounds progress)

    They cannot lock in your strike price until you join and your shares are approved by the board (usually within 3 months of your joining)
    2d 0
  • Google
    uhfrxh

    Go to company page Google

    uhfrxh
    You definitely need to get strike price to calculate your true Stock options value. Itll be 318K - 1875*strike.

    I recently accepted an offer without fully understanding the math with the strike price cost to buy taken into account and now my offer feels not as exciting
    Yesterday 1
    • Wonder
      yzDT44

      Wonder

      yzDT44
      You also need to divide by 4 (assuming 4 year vesting)
      18h
  • Wonder
    yzDT44

    Wonder

    yzDT44
    You can/should ask them what the current 409a price is. It’s prob around $70-80. That’s what your price most likely will be.
    2d 1
  • Apple
    $fo

    Go to company page Apple

    $fo
    I think you should ask the strike price cuz that’s your investment to buy the stock. Your actual numbers would be preferred - fmv . Atleast try to get a ballpark
    2d 1
    • Wonder
      yzDT44

      Wonder

      yzDT44
      Yes that’s what the current strike price is but it’s not guaranteed to be OPs until they join and Board approves shares. The strike price will most likely not change between now and then (assumes no financing has happened) but it can
      2d
  • Wonder
    yzDT44

    Wonder

    yzDT44
    Yes completely normal
    2d 0