
A VC: Employee Equity: The Option Strike Price - taylorwc
http://www.avc.com/a_vc/2010/11/employee-equity-the-option-strike-price.html
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davidu
I'm not sure why Fred doesn't mention it, but as your option price creeps
upwards, it becomes (for better or worse) a form of handcuffs for employees.

If your option price is $0.50/share and you grant a new exec 200,000 options
then it will cost them $100,000 to leave your company once vested. At
$0.01/share, your early employees can exercise themselves and bolt.

That's why early Facebook employees are gone, but ones who showed up in 2008
and 2009 are forced to stay or forfeit their options. The alternative of
purchasing them and selling them quickly creates a massive tax hit, which is
why almost nobody does it.

As a consequence, there are already people at Facbeook who want to quit but
can't afford to.

