There is an informal poll running on Paul Graham’s Hacker News right now asking startup workers about their experience with stock options.
“Just want to see how much people earn actual cash from their employee stock options. If you joined a startup as an employee and had some stock options, how much did you earn during exit or IPO?”
The most common response by far: None – my stock option vanished and don’t own any
The poll comes on the heels of a story about Zynga demanding employees return stock options or be fired in the run up to their IPO.
A web developer named James Burhart from San Francisco wrote in to say: “First employee hired at a startup. Paid for my options before leaving the company. Six months later the company was acquihired by Google. Three months after that I was given paperwork informing me that those shares are now worth exactly $0.00/each. Founders made out well enough from the deal to pick up high-end luxury sports cars though, which is the important part of an exit, right?”
Jen Harvey, a co-founder at Voxilate, wrote in to request a new poll response. “I voted three times…but this is missing a negative entry – you know, the scenario where you pay an obscene amount of taxes on the ridiculously inflated price of your shares when you exercise (and can’t sell yet while awaiting a liquidity event), but the shares are later downgraded to 1/10th taxable estimate…so you get to hold on to that loss for years, hoping at some point to be able to be in the position to write off the tax loss! Yay, equity! ;)”
And finally, “Can there be a “Company folded, stock options got bought out from under me without my consent for pennies to give to the people who were buying the remains of said Company” option? If so, price it at $200 dollars, and i’ll vote for it. On one of my final days I was handed a check for my shares, because I wasn’t going with the new owners, and all stock was to be given to them. Was never asked if I wanted to sell, and it was valued extremely low for ‘accounting purposes’.”
No wonder offering equity in a public company is becoming an advantage for techie headhunters.