
If you have startup stock options, check your option plan - alexdevkar
http://blog.conspire.com/post/112700131803/if-you-have-startup-stock-options-check-your
======
AndrewKemendo
I read a lot about how employees get screwed over with stock options, so what
we decided to do was to just give employees vesting stock straight up as a buy
through.

Basically the way this works is that we give new employees an up front lump
sum in the amount of how much it costs to purchase the shares of the company.
The employee then purchases those shares from us in line with a vesting
agreement. All warrants and conversions are exactly the same as the founders
shares.

This means that they pay tax on this purchase as regular income rather than
capital gains up front with the money we give them for it. This prevents a
heavy tax bill at conversion and allows them to retain their vested shares
regardless of if they work for us or not after the first 12 month vesting
period.

We calculated that the up front taxes are magnitudes cheaper in the long run
because the increased valuation will cover those differences handily and there
is no waiting period like there is with capital gains tax.

In the end though our intention was to make a simple way for our employees to
actually own the stock we give them as compensation and it not be something
that they can lose or be restructured easily. If a VC or acquisition wanted to
restructure that away for employees then they would be forced to restructure
everyone's, so we are all in.

~~~
triplesec
I wish more companies were so transparent and decent as yours. Why do others
prefer not to do it this way, if it's not just sheer greed and obfuscation?

~~~
ekanes
This approach is awesome, but (I am not a lawyer, this is not advice!) one
drawback is that the whole concept of an option is that it's optional. If the
company succeeds, you exercise your option and spend that money to get a much
larger return. If you must buy the option, and the company does not succeed,
then you've spent the money and it's gone. You've lost the "option" aspect of
an option.

And of course, yes, the company may say "we're spending our money to buy this
for you, don't worry" the truth is money is money. Someone (company or you) is
buying the option early, thus having less money to spend on other things.

Alternatives could be the company pays you that money, so it's yours to spend
as you see fit. Including, someday, buying the option if you want.

Hope that helps!

------
bluehex
Another thing to understand (and this will sound obvious to many of you) is
that your options may be worth nothing, even after a multi-million dollar
acquisition if there are priority stock holders (the investors) ahead of you
in line.

As a young and naive engineer I learned of this fact the day the first startup
I worked for was acquired. First I read the big number that was to be paid for
the company, was ecstatic, and immediately starting doing "x-million times
half a percent" in my head followed by a sinking feeling as I read the clause
stating that common stock holders would get $0.

In retrospect it sounds obvious that if the company sells for less than the
money the investors put in, your x percent is worth nothing. But it's easy to
get carried away thinking you actually own a percent of the company, and that
a sale means a pay day for you. Don't let the first word of acquisition get
you too excited, the come down sucks.

~~~
cylinder
How did that happen? The acquirer just purchased a certain class of shares,
i.e. preferred stock and didn't care about owning 100% of the company?

~~~
ChuckMcM
It works as follows, there is a line of people who need to get paid,

If the startup took on any debt, at the front of the line is a bank. Their
'note' usually gets paid first. $POOL -= $BANK

When people invested in the Series A, B, C, ... their stock came with a
'liquidation preference' (which can have a few variants, but the two most
common are, the investor chooses if they want the liquidation preference or
the common value, the investor gets their liquidation preference _and_ the
common value. Note that these numbers are in $dollars not in $shares, so if VC
A puts in $1M dollars with a 2X liquidation preference they get back $2M
dollars. $POOL -= $LIQUIDATION

Sometimes at the same level, or just behind the investors, are convertible
note holders, who gave money or equipment in exchange for shares. They often
have the choice of getting _either_ their money back, _or_ the shares. $POOL
-= $NOTE.

At this point, if there is anything left in the pool it gets distributed to
common shares.

A nice rule of thumb is that the most common liquidation preference is 2X
(these days anyway) so if the price is < 2X the amount of money raised to
date, the common stock will not have any money allocated to it.

And in those situations it makes no difference if your stock 100% vests on
acquisition or not, it is still worth 0.

~~~
bradleyjg
The implicit question is—where the acquisition allocates $0 to common, in what
sense are the board of directors fulfilling their fiduciary duty to common
shareholders in approving the deal?

~~~
dkfmn
Well, their fiduciary duty is to all shareholders and common generally holds a
minority ownership interest.

It depends heavily on circumstances, but in a less than amazing sale the
acquiring company often wants an incentive for employees to stay. So the
acquisition offer will ensure that common gets nothing but they'll be covered
by an earn-out over the next year(s).

As you can imagine the negotiation gets very tricky because investors do not
generally participate in the earn-out.

~~~
bradleyjg
This 2009 case from the Delaware Chancery Court seems on point: In re Trados
Incorporation Shareholder Litigation
([http://courts.delaware.gov/opinions/download.aspx?ID=193520](http://courts.delaware.gov/opinions/download.aspx?ID=193520))

The whole thing is well worth reading for anyone involved with VC funded
startups. It involved an acquisition with a management incentive plan and
preferences that together left nothing for common.

Among other things the court held that where there is a conflict of interest
the board must prefer the interests of common shareholders over those specific
to preferred (the interests of preferred over common being contractual). It
also found that the board had acted procedurally unfairly and in several
places suggested outright dishonesty. For those reasons it applied the
harshest standard under Delaware law (entire fairness).

In the end however, it found that the company's value as an ongoing concern
though not nothing, was not enough to overcome the large liquidation
preference and cumulative dividend. Thus, since prior to the deal common stock
was worthless a deal valuing them as worthless was fair within the meaning of
Delaware law. Note that the litigation lasted 8 years, and at the end of the
linked decision it was an open question whether the defendants were going to
have to pay plaintiff's legal fees despite having won. (I couldn't find any
information on what was ultimately decided there.)

------
mcdoug
Why worry about stock options at all? There is a spectrum of outcomes. On one
end the startup flops, or is bought for so little that your share, even if
paid out, is close to 0. On the other end you have Google, Facebook,
Instagram, etc. Companies where 0.5% is worth quite a bit of money. The
problem is that the majority fall in-between, where your stock options will be
worth nothing, yet the company will sell for a decent amount of money.

So what you should do is value the stock options at 0. If you have the spare
cash, buy them as early as you can, but don't count them for anything. They
are a lottery ticket that your company is the next Google and like any lottery
ticket they are likely worth nothing. If the startup is offering to pay you
half of what you'd make elsewhere, waving stock options at you telling you
they'll make you rich, consider if they just handed you a pile of lottery
tickets and half a paycheck. If you'd still take it (maybe you really like the
people, or want to work in this field), go for it. Otherwise, they are just
trying to get your for a far cheaper price than you'd get elsewhere.

~~~
iykwimthrowaway
I'm very curious about the middle part of this spectrum, since I'm currently
in it: I'm an early employee with a significant chunk of options (high single-
digit %), and the company is profitable and valued at (to my understanding)
somewhere well over 10x the total amount of funding we took (I've heard talk
of 40-50x). Management is explicitly not looking for an exit: they just want
to keep building this company for the long term. My salary started on the low
side for my career, but was reasonable, and it has slowly ratcheted up over
time to the point where I think it's certainly fair but I could be making more
elsewhere. On the whole, it feels like I have a large chunk of (potential)
ownership in something very successful.

My question is: how does this actually benefit me in the big picture? I'm
approaching the 10 year date when my options agreement is going to EXPIRE, and
it's still unclear to me whether I should exercise them, because as far as I
can tell, they're just very expensive (when you consider the tax implications)
paper. What's the endgame for this success story putting cash in my pocket?
Profit-sharing? Other than the usual big-bang exits you read about, I have no
clue.

~~~
ditonal
Are you invited to board meetings? If not, considering yourself a "potential
owner" when you're not invited to the meetings where owners decide things
means you are very confused about things. There's a reason why when a company
goes public, the quarterly minutes at board meetings become public as well,
because you aren't really an owner if you're excluded from even learning about
the biggest of decisions.

What you should do depends heavily on whether you have common or preferred
shares. If you have the options to buy common shares, which you probably do,
they're worthless so don't even bother exercising them, the people who are
invited to the board meetings have all sorts of routes they can take so that
your options will become meaningless, so to spend the money to exercise and
pay the capital gains on them is madness.

My advice is to recognize that you have a sunk cost (look up sunk cost
fallacy) and jump ship. Keep applying to companies like Google, Facebook,
Amazon, Microsoft, and other larger companies until one makes you an offer,
and those companies will give you real compensation packages and stock plans
that you will be able to easily turn into American dollars in a year.

~~~
iykwimthrowaway
> considering yourself a "potential owner" when you're not invited to the
> meetings where owners decide things means you are very confused about things

Well gosh, I don't think there's any need to get nasty about it. I may be
naive but give me a break. When I refer to ownership I'm obviously simply
referring to being a shareholder. No, I am not invited to board meetings, but
as far as I know, neither is anybody else who's not exec staff. Is this
unusual?

The options are on common shares. Can you elaborate on schemes in which common
shares are made to become worthless? I have been explicitly told that there
are no liquidation preference multipliers on the preferred shares, and the
valuation is well above where that would matter. So what sorts of shenanigans
would make my shares worth less? Please be specific if you don't mind. It may
be a dumb question, but just telling me I'm dumb isn't really getting the
point across.

Regarding going to {GOOG,FB,AMZN,MSFT}, I've actually already been through a
couple of those and experienced the "real compensation packages and stock
plans" and got a couple pretty respectable windfalls out of them, but I've
decided the tradeoffs aren't worth it. Job satisfaction absolutely can't be
beat where I am, and that's worth a lot to me. That doesn't mean I don't
wonder what my n% is actually worth and how specifically that works.

~~~
mahyarm
If it's a profitable company that you've been at almost 10 years, that you
want to stay at, can't you ask them for a raise, and ask them for help with
the stock option problem? They probably would want to work with you if you've
been there that long.

~~~
iykwimthrowaway
Raises have of course been requested and granted. My salary isn't really
what's at stake here and any raise I could ask for is dwarfed by the potential
value of shares sitting on the table that I simply don't know how to get money
out of. What are you imagining I'd ask for when you say "help with the stock
option problem?" Ask them to buy me out?

~~~
mahyarm
Well for example, a very low interest loan secured by the stock from the
company to help you buy it out / deal with AMT tax credits being distributed
over the years. Or a bonus to help you buy out your long vested stock and the
AMT tax difference you will have, etc.

With the bonus, the stock shenanigans that they can perform will be relatively
minor as far as additional expenses would go. If they IPO 4 years later and
you get a windfall, good. If they liquidate and you get nothing, oh well.

You could also sell the shares to interested people on something like
Equidate. Then you don't have to cash in your options until you have an
interested buyer. If you get right of first refusal issues, then the company
would be buying out your stock directly in that case.

I've never used something like Equidate, so your milage will definitely vary.

------
tieTYT
The last two companies I've gotten offers from gave me very, very heavy
pushback when I tried to figure out what % of equity they were giving me.

They told me they were giving me 5,000 shares (for example). OK... 5,000 of
how many? What % of all the shares is 5,000? My understanding is you need this
information to know if the equity is worth something or nothing. Yet, they
really don't want to give me this information.

For one of these jobs the recruiter I was going through (this is a big
recruitment company) literally told me nobody has ever asked these questions
about the options they were getting.

Am I doing something wrong? Do I have a misunderstanding of how these things
work? Is it unreasonable for me to be told the outstanding shares?

~~~
phamilton
I encountered this myself and have a few conclusions:

1) Be open with them and tell them that without a cap table you have to assume
the options are worth $0. Use that to push for more salary.

2) The reason for not disclosing that information is often that the company is
close to another fundraising event (an IPO for example) and that is very
confidential information. It's definitely not a bad thing.

3) A safe assumption (to use yourself, not in negotiations) is that the
company will exit at around $10/share. There might be a reverse split or
something so take this assumption with a grain of salt.

My experience was not that the company was being malicious. I joined and it
worked out fairly well.

~~~
tieTYT
And what do I do if they use #2? Are you saying it's reasonable for them to
not give me that information? Should I assume they're worth $0 in this
situation?

~~~
FeeTinesAMady
What else can you assume, though? You have no information at that point.

------
grandalf
If you work at a startup and options stuff is not transparent -- valuation,
vesting schedule, terms, etc., you should be quite worried.

Founders often end up in a situation where there is significant dilution and
as the hockey stick changes into a slightly different shape they _know_ that
nobody's options are worth anything.

Founders with integrity will acknowledge this and make adjustments. Those
without integrity pretend it isn't true and create a culture of secrecy around
options grants/terms.'

Edit: You should also be able to do the math on what your options are worth
fairly easily as funding rounds approach and valuations occur.

~~~
danielweber
_Founders often end up in a situation where there is significant dilution and
as the hockey stick changes into a slightly different shape they know that
nobody 's options are worth anything_

This is a very common occurrence, and unless you have a seat at the board, you
are completely at the company's mercy when events like this happen.

Usually they will make current employees "whole," although the definition of
that varies a lot. If you've left, though, you are completely shafted. The
board will say "well you are no longer contributing to the company" but the
same thing applies to the VC fund that invested last round and didn't this
round.

There are an amazing number of hoops that you have to jump through for options
in a start-up to pan out, and you have to hit essentially all of them, or else
they are worthless.

------
birken
For those of you that found this interesting and want to learn more about
stock options, with advice that is a bit more general, I highly recommend "An
introduction to stock options for the tech entrepreneur or startup employee":

[http://www.scribd.com/doc/55945011/An-Introduction-to-
Stock-...](http://www.scribd.com/doc/55945011/An-Introduction-to-Stock-
Options-for-the-Tech-Entrepreneur-or-Startup-Employee)

It gives a detailed background of a lot of key issues related to stock options
and some really well reasoned recommendations that are applicable to anybody
taking a job involving stock options.

------
lquist
_" But note this doesn’t mean everything will be perfect. If the acquirer
decides that you are no longer needed, they could keep your option agreement
intact and terminate your employment. You wouldn’t get any further vesting
unless you have single-trigger or double-trigger acceleration, and you’d be
out of a job. It would be the same as if you’d been fired by your company
before the acquisition."_

Maybe I'm reading this incorrectly, but if you don't have single-trigger or
double-trigger acceleration, the employer has all the leverage they need to
renegotiate your (incentive) contract.

~~~
alexdevkar
You're right. That's true the before the acquisition and after. Your employer
can say you have to accept a reduced package or get fired.

The difference is the starting point of the negotiation. If the acquirer wants
to keep you, the "right" language in the option plan means the starting point
is your original comp package. You have to explicitly agree to a reduced
package for it to change. If you have the "wrong" language, there is simply no
deal in place to start the negotiation.

------
Iftheshoefits
Do you know what I call a 1%/4-year vestment "equity" plan? I call that an
ESPP (employee stock purchase plan) by another name, with inflated valuations
due to startup hype.

Why would anybody agree to that? At least insist the first half percent vest
proportionally over the first year with each paycheck.

~~~
mtviewdave
The standard Silicon Valley employee stock option plan is X number of shares
vested over 4 years, with the first 25% vesting all at once after 12 months,
and the remaining 75% vesting in even installments once per month over the
remaining 36 months. This has been the standard for decades.

If you can arrange something more advantageous, by all means do it, but I
think you're going to have a hard time negotiating away the cliff. Having the
cliff ensures that employee has proved herself before getting a stake in the
company, which most investors and founders believe is important.

~~~
Iftheshoefits
That may be standard, but it's entirely not in the interests of any employee
to play the game. The founders' and investors' beliefs regarding "skin in the
game" are missing one key component: the reduced salary one takes at a
startup. That reduced salary _is_ skin in the game, as is the acceptance of
risk by agreeing be compensated in equity in the first place.

I don't object to 4-year vesting. I don't object to cliffs, either, per se.
But I wouldn't consider being treated that way for such a tiny stake as 1%.

~~~
aetherson
I think that people talk past each other a lot, and part of it is
understanding that 1% is not 1%.

Like, if I'm joining a company that has started to get traction, is well-
funded and pays me say 80-90% what Google would pay me, and is likely to
either fail or experience a monetization event in the next 3-5 years, and I
get 1% of that company, holy shit guys that's amazing. Maybe still overall
less compensation than Google would've given me, but more likely to change my
life.

If I'm part of the founding team of a company with no product out right now,
that's paying me 20-50% of what Google would pay me, and any monetization
event is clearly 7+ years off, 1% is a lot less exciting for four different
reasons: 1. Obviously I'm giving up more salary. 2. Payout is less likely. 3.
Payout even if it happens is farther away. 4. (Crucially) My stake is very
likely to be much further diluted before any monetization events.

If you ACTUALLY get 1% of the monetization of any reasonably successful
company, you're probably doing pretty damn well. A medium-sized acquisition at
$300 million, 1% of that is $3 million. 1% of WhatsApp would've been around
$200 million. 1% of Facebook would've made you a billionaire.

Trying to get more than a genuine 1% isn't very important. Trying to figure
out what the percentage that they quote you in your job hire process will turn
out to be during a monetization is very important.

~~~
harryh
This is the best comment in this entire thread. People see 1% and immediately
think small when that is not, in fact, the case.

They have almost never thought through the fact that it generally takes a lot
of people to build a successful company so that 100% needs to get divided up
into a lot of little pieces.

~~~
Iftheshoefits
It's pretty tiny when the expectation is that one will be treated like a
regular employee with respect to compensation and benefits but expected to
behave like a 20% (or more)-equity founder with respect to passion and
(especially) effort.

~~~
harryh
That's not the expectation.

------
ausjke
Is there any generally reasonable 101 on how to do equity/share/stock-option
in an early stage start-up? Tried to google for it and never found any general
guidance for that.

If you're paying a full salary/benefit for them, the options etc is really
just trying to keep them from jumping around? I'm open to all ideas but would
like to find some common/typical silicon valley way to do this for startups.

~~~
srathi
I found this very helpful.

[http://www.fairmark.com/execcomp/index.htm](http://www.fairmark.com/execcomp/index.htm)

------
shanemhansen
I've worked for some of the largest companies in the world as well as been
employee number one at multiple startups (one of which was backed by google
ventures), so I hope the following advice is good:

If you're going to found a company, go for it. I'd like to do the same myself
someday. If you're going to work for a startup, make sure they pay you well.
In dollars (or your local currency). I treat stock options as a lottery
ticket, not a substitute for income.

Basically working for a startup is much like working for a big company.
Neither really offers you long term stability. You have to deal with politics
in both. The biggest difference in my opinion is that startups typically have
really long hours and some pretty big egos.

------
anonstartupemp
I have a related question for folks here.

I joined a startup around 2009 as an early employee, left after a couple
years, and bought the vested stock. (The company is based in the US, and I'm
not a US citizen, FYI). I've been holding on to these stocks so far. Compoany
has rasied a small series A just around the time I joined. The company has
raised a few rounds of funding since I left.

It now looks like the company may IPO/ or be privately acquired. I have not
been in touch with anyone in the company over the past couple years.

What steps do I take now to ensure I don't get screwed as part of the exit,
and/or my stocks diluted to become meaningless? I'm looking for general
advice.

------
jalonso510
It would be a pretty rare company that is willing to revise their stock option
plan in response to a request from a potential employee. They'd have to take
the request to their board for approval, then also get a vote of the
stockholders, and would have to pay the lawyers to revise the documents. Just
an administrative headache regardless of the legitimacy of the request and
probably not a great way to start off the relationship with your future
employer.

------
mattgreenrocks
Someone could probably make a nice bit of money on the side helping new
engineers in SF review/deal with their stock options. You'd have to know this
stuff well, but I don't think that's a big hindrance to anyone.

Think of it as both giving back and pushing back on what can be predatory
treatment of employees.

~~~
saryant
Isn't that what lawyers are for? I paid mine a small fee to review my equity
agreement before I signed and I made it clear to my potential employer that I
couldn't sign until my lawyer signed off on it.

------
ChicagoDave
Options are useless. Their value is entirely based on what the actual
shareholders decide. It doesn't matter if stock gets sold to other investors
or the company goes public. Options are useless. You want a stake in a
business, you need to ask for actual stock. Not options.

~~~
nemo44x
Well, you have the right to exercise those options and then they become stock
and you have a stake in the company. The nice part of it being an option is it
grants you the right to invest in the company at a static price if you choose.
And you choose to do this when the company is doing very well.

~~~
ChicagoDave
No. Options can only be exercised if the owner(s) allow it. They can just as
easily decide not to exercise them and revalue them at $0. This is generally
considered unethical and would dramatically impact retention, but there is no
explicit guarantee in options. It is implied and their value is entirely at
the discretion of the owner(s).

------
cletus
This is an inadequate overview of options issues for startup employees. The
major issues are probably:

1\. Acceleration on change of control (the article covers this). 1 year
acceleration is fairly common it seems. There should be something here. But
fully acceleration of granted options is probably more than you realistically
can hope for. After all, you didn't need to work for that year to get the
options. There should be some balance here.

2\. Rule 83b electoins. Particularly relevant for pre-funding startups and
especially for founders. It allows you to pay all the tax on options up front
rather than be hit by yearly AMT bills;

3\. Clawback agreements. This is a nasty one that was most publicly brought to
light with Skype (the second time around). A bunch of executives were fired
before the acquisition went through, allegedly for performance reasons. Their
options could be bought back at _issue_ price, resulting in a windfall for
SilverLake of possibly several hundred million. Want to sue? Well the company
was incorporated overseas. Good luck with that.

The moral of the story is watch out for any rights the company has to
repurchase your options and at what price.

Repurchases in general aren't necessarily evil. It's good to avoid having a
lot of shareholders for early stage companies (due to SEC limits on number of
shareholders for non-public companies) but such repurchases need to be fair.

4\. You're taxed on options based on their fair market value when they're
issued barring a Rule 83b election;

5\. Liquidation preferences. VCs generally have some form of preferential
treatment on how they're repaid in the event of a buyout. This can take a
number of forms.

The most reasonable is that they're simply guaranteed to get their money back.
Meaning if they paid $10M for a 40% stake in a company that gets bought for
$15M they're going to get their $10M back instead of 40% * $15M = $6M. That's
not unreasonable.

But what's not reasonable (IMHO) is "participating preferred" liquidation
preferences. What this means in the above scenario is the VC will get $10M of
the $15M back and then 40% of the remaining $5M. So the other 60% are divvying
up $3M. That's a lot less attractive.

6\. Bonuses in lieu of acquisition. You may see a headline that says your
company has been bought for $100M and you own 1%. Great! You're now a
millionaire! Not so fast...

It may turn out the VC owns 40% participating preferred with $20M funding and
the company is actually only being bought for $50M. The other $50M is
incentives in the new company paid to the founders and possibly key
executives.

So you're only getting 1% of $30M.

7\. Dilution. Your 1% may not be 1%. You may have been told something like
"there are 1M shares outstanding and we're granting you 10,000 options over 4
years with 1 year cliff". So you own 1% right? Well, maybe you do and maybe
you don't.

The company may be reporting outstanding shares rather than outstanding shares
plus any obligations it's made. It really needs to report on a fully diluted
basis. There may be convertible notes and rights of existing VCs to buy in in
future funding rounds, etc.

So anyway there are a lot of potential traps.

------
pythoncloner
I have accepted a startup offer with stock options 2 days back. The CTO told
me about the number of outstanding shares in the company and the last 409(A)
valuation and the current valuation they are going to raise funding. But
except #options, these details are not specified in the offer letter but i
have accepted.

Should i consult a lawyer before i join this company? If so, can you guys
recommend some lawyer contacts? I have been in bay area for last one year and
i don't have much contacts. Help! Thanks

------
wiherek
This is a great resource for legal advise on the case. I also was offered
options on a startup that I worked at. I am adding this to my bookmarks :D
some cross-reference [http://www.businessinsider.com/stock-option-questions-
startu...](http://www.businessinsider.com/stock-option-questions-startup-
employees-should-ask-2014-4)

Generally I prefer to leave the legal stuff for my lawyer and focus on coding,
but having a reasonable knowledge on the case is preferred.

------
URSpider94
This happened to me. My employer got sold, and only about half of my
outstanding ISO's were vested at the time. However, I'd been there a pretty
long time, and getting more ISO grants as time went on, so I wasn't too bent
out of shape about it.

In my opinion, you should think about instruments such as RSU's and options as
accruing to you at the date of vest, not the date of grant. From an accounting
standpoint, that's how the company is viewing it, or at least should be.

------
whistlerbrk
This stuff is simply too complex. Just like there guides that make open source
licenses easier to understand I wish there was the same for startup stock
options.

------
cedsav
This advice should be directed to entrepreneurs.

As a founder, it's good to know what terms are "standard" and what terms are
more pro-employee or more pro-management. Then you can use that information
when setting up the option plan with your lawyer, and push back if you feel
the lawyer is overzealous in protecting your own interest.

Once the plan is in place, it's unfortunately too late for the employee to
seek more favorable terms.

------
paulhauggis
This is why I never take equity. It's just a way to dangle a carrot in front
of an employee to make them think they will get a big pay day. Many times, the
employee doesn't want to quit because this pay day is seemingly right around
the corner.

My previous employer gave me stock options on top of my salary. I never really
cared about the stock options too much. A few months ago, I found out the
owner created a new LLC (and moved the company to this new LLC) essentially
making my options worthless overnight.

I would rather get paid my true market value.

~~~
chrisabrams
a good employment contract would cover this scenario...best to make friends
with an attorney in the field :)

~~~
Kalium
Where would one go to set about purchasing beer for such a new friend?

------
joshkpeterson
Ideally before you accept the offer :)

~~~
efuquen
True, but in the current hiring climate and if you're still at an early stage
you should definitely still have leverage.

~~~
chrisabrams
Yes, if the company is early stage, then nothing should be out of the
question.

