Comments on: Introduction to Pre-IPO Stock Options http://www.bargaineering.com/articles/introduction-to-pre-ipo-stock-options.html personal finance blog with anecdotes, advice and commentary. Sun, 22 Nov 2009 06:04:27 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: steve http://www.bargaineering.com/articles/introduction-to-pre-ipo-stock-options.html/comment-page-1#comment-7810 steve Tue, 16 May 2006 02:39:17 +0000 http://www.bargaineering.com/articles/introduction-to-pre-ipo-stock-options.html#comment-7810 A few other things to consider with pre-IPO options: 1. You may see some value in the options even before an IPO, assuming the option plan calls for any type of independent valuation. Barring that, you would like have to wait for the IPO or for some type of corporate transaction. 2. The Company may in fact have a repurchase clause attached to the grant, so even if you exercise your right to exercise vested options, the Company can buy them back (perhaps even at the price you paid) and there's nothing legally you can do about it. 3. Pursuant to #1, if you feel you are in a position of power in your negotiation, you can always ask for accelerated vesting in the even of a Corporate transaction. Many companies will consider this, especially for important hires. 4. Kurt is correct about the dilution and overhang, but for the majority of people, there is not much that can be done. For Senior level hires or critical talent, consider getting your employment agreement to discuss options in percentage terms of ownership which can be adjusted as the outstanding options change. Hope this is helpful. A few other things to consider with pre-IPO options:

1. You may see some value in the options even before an IPO, assuming the option plan calls for any type of independent valuation. Barring that, you would like have to wait for the IPO or for some type of corporate transaction.

2. The Company may in fact have a repurchase clause attached to the grant, so even if you exercise your right to exercise vested options, the Company can buy them back (perhaps even at the price you paid) and there’s nothing legally you can do about it.

3. Pursuant to #1, if you feel you are in a position of power in your negotiation, you can always ask for accelerated vesting in the even of a Corporate transaction. Many companies will consider this, especially for important hires.

4. Kurt is correct about the dilution and overhang, but for the majority of people, there is not much that can be done. For Senior level hires or critical talent, consider getting your employment agreement to discuss options in percentage terms of ownership which can be adjusted as the outstanding options change.

Hope this is helpful.

]]> By: Kurt http://www.bargaineering.com/articles/introduction-to-pre-ipo-stock-options.html/comment-page-1#comment-7799 Kurt Mon, 15 May 2006 23:36:46 +0000 http://www.bargaineering.com/articles/introduction-to-pre-ipo-stock-options.html#comment-7799 It's also extremely important to get in writing exactly how many shares are outstanding and the process for granting more. If the majority holders can dilute you down to nothing, that wouldn't be good! It’s also extremely important to get in writing exactly how many shares are outstanding and the process for granting more. If the majority holders can dilute you down to nothing, that wouldn’t be good!

]]>