
What are my options if I get "fired" very close to a vesting date? - xiao

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xiao
Assuming performance is not an issue (i.e I was a good worker) ... is there
any recourse to being removed from a startup right before a significant equity
vesting date?

~~~
nickb
Consult a real lawyer ASAP. Probably none of us here are lawyers and we might
inadvertently give you some bad advice. Don't just write off your options...
you might get them to give you an early cliff or might allow you to vest a
large portion of your shares. Certainly, they don't have to do that and firing
you is their right and they owe you nothing but maybe a threat of a lawsuit
will change their mind. No startup wants to have a lawsuit on their hands
since it drains time & money from productive things and it looks really bad
during the due diligence phase since it introduces uncertainty.

Talk to them first... see if you can get your options or a prorated portion of
them before contacting lawyers. But make sure that you notify them that you
will pursue this matter through courts if you can't settle amicably.

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snorkel
If you left on good terms, assuming your version of "fired" is not as bad as
"FIRED!", perhaps you can buy your options at the strick price, but that's
risky. If you buy your options for say $10000 and the stock ends up being
worthless then you lost $10000 plus taxes (read on)

The AMT Tax Monster: Suppose you buy your options for $10000, and if the
startup is acquired or publically traded and your shares are worth $90000 at
the end of the year, then the IRS will say that you earned an extra $80000 in
short term capital gains ... WHETHER OR NOT YOU SOLD THE STOCK! You still have
to pay tax on that change in value. That's a "feature" of the AMT tax. So you
pay the IRS an extra $22000 in taxes. You're now down $32000. Finally after 30
months you sell the stock for $38000. So overall you gained $4000 plus and if
you know which forms to file you can get a tax deduction for the extra tax you
paid before... up to certain amount.

So don't buy your options unless you're absolutely certain the stock will be
worth a lot more than what you paid for it and you can sell it quickly at any
time.

~~~
create_account
That is bad advice on so many levels.

It's the equivalent of getting punched in the mouth and then thanking the guy
who hit you!

Also, if he really was tossed out unfairly, his buying stock ruins whatever
legal case he might have.

~~~
snorkel
Stock options means you have the option to buy the stock at a discount rate.
Whether you're fired or not the only way to act on your options if you have to
buy them first.

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crxnamja
You are legally entitled to shit. This happened to me and you really don't get
anything. It does depend on the state because California is at will, other
states may vary. I guess most of us young folks have to realize that we are
entitled to nothing. I guess that is the good thinking about creating our own
businesses.

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hughlang
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