What if I quit my job when my stocks are only half vested
I work for a startup and my stock options have to vest for 3 years. They’re only 60% vested. It’s not currently worth anything but has a promising future. If I quit now, and the company becomes profitable in the future and then goes public, am I still owner of the 60% that vested? Or do I lose it all? Thanks for any help. I’m not very knowledgeable in this area at all.
Anything vested should belong to you personally. But this is a question for your company. Some companies could just forfeit everything supposedly already vested. It is all paper money anyways.
It's yours but if there are additional funding rounds your share will likely shrink significantly.
I'll add to this also thst of you are not willing to take the risk, there are companies that can purchase your stocks for a small profit share. Unfortunately I don't know the details bit my friend did this when he was leaving a successful startup that had so much cash going in, thst it wasn't looking to go public or sell in the coming future.
I think many of the successful startups put clauses in the options contracts that prevented employees from selling vested shares to third party entities pre IPO.
Absolutely this! The only valid answer to this is read your specific contract/HR/payroll guidelines. SOAPBOX: Any crowd sourced platform without a down vote system invariably becomes littered with garbage answers from people who truly believe they’re trying to help but don’t have enough expertise to answer accurately. For Christ sakes if you don’t know an answer don’t offer one
For ppl who have made 💰 in startups apart from leaving after company going public, can someone share their experience? That is unlike Facebook, Snapchat etc ..
Small acquisition. Strike price of options say was $0.20/share. So I paid $0.20 times 9,000 shares that I had option to exercise when I quit. (Fair market value at time I left was something like $1. I put $0.80 x 9,000 as paper gain on taxes for purposes of calculating AMT.) Company got acquired later and I got around $7 per share. So then I paid cap gains tax against my basis (prob considered 0.20/share but I forget).
I don’t know why this would be complicated, in the standard case. The question had nothing to do with selling the shares to someone else on secondary market, etc.
You have to exercise your options within 90 days of leaving. Edit: For the sanity of XPbr65, this is the case for the vast majority of situations I’ve seen and encountered but the best thing to do is consult your Stock paperwork to see what you must do upon exiting the company.
This is so wrong. This is not a universal rule.
It is most common to have to exercise within 90 days. It depends on the company. Some companies like Pinterest give you seven years, but it is not common. If you have a list of companies showing that this is different, I’d love to see it but since vast majority of SV companies use very similar agreements the exercising within 90 days of a qualifying event (fired, quit) clause is most common. So, no it’s actually not “so wrong”. If it was wrong, it would never be true but since it is true in most instances you’re mistaken. Edit: There’s even an article from Y Combinator’s Sam Altman on this topic. http://blog.samaltman.com/employee-equity