Convert stock options to stock

New
j3d1l0rd

New

j3d1l0rd
Dec 30, 2020 5 Comments

Leaving a startup after six years that hasn’t made it yet and I’m not entirely sure will have an exit, but I have a pretty decent amount of options that I’d rather not lose. I don’t want to pay the $50k + to exercise the options. In return for helping the startup via consulting afterwards (in the only engineer atm) and getting whoever comes after me up to speed, they are extending the timeframe through the end of 2021. Everyone knows there won’t be an exit in 2021, so it seems like a nice gesture that won’t ultimately accomplish anything other than be a carrot dangling in front of me aside from the consulting fee. I’ve asked for the company to convert my options to actual stock without any money being exchanged. Is this a reasonable ask on my part? I spoke to the CEO about this over the phone but he wants it in writing after consulting with the board. Anything I should look out for?

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TOP 5 Comments
  • Airbnb
    aBGC01

    Go to company page Airbnb

    aBGC01
    To 2021? Total scam. Ask for 10 year extension on the options
    Dec 30, 2020 0
  • VMware
    ucJc13

    Go to company page VMware

    ucJc13
    There might be tax implications for doing this. Are you trying to liquidate the position or do you actually want shares?
    Dec 30, 2020 2
    • New
      j3d1l0rd

      New

      j3d1l0rd
      OP
      I really just want to be part of an exit if it happens within a reasonable timeframe. So I do think kicking out the extension might be the way to go.
      Dec 30, 2020
    • It is very good tax-wise to exercise early and hold for > 1 year. If you think there is a good shot this company is doing well (rev growing, high margins), I would exercise even if its only a small amount. Ask what the 409 valuation is currently so you know how much taxes you pay when you exercise too. Figure how much you can afford and do it. When it nets, your tax rate is long term cap gains so a good savings. But this only works if it nets.
      Dec 30, 2020
  • There are tax implications between the current fair market value and your strike price FYI
    Dec 30, 2020 0