Please share how your company esop policy is. Is it really valuable for employees or just used to create hype and retail talent. How many years can you exercise them after resignation? How did the taxation go if someone has been lucky enough to convert it to cash? Should esops be a factor while leaving current company or joining a new company?
I hope I am understanding this correctly. You have to pay from your own pocket whenever you want to exercise those esops (in case of any monetization event). Only in rare cases where FMV > exercise price, you get the difference..and that's your upside..
No,
You have to pay exercise amount + the tax on the value of ESOP. Say your ESOP unit Is worth 10k and exercise price is 100. You pay 100 and tax on 10k-100 as per tax bracket.
Now, you own the actual stock, instead of stock option. When you sell it, the difference between FMV and stock price is the profit/loss for you. Depending on when you sell it, you either pay short term capital gains or long term capital gains on it
Majorly a scam exercised them many times but had a selection in startups where I worked. Most of my other friends were not able to exercise it coz the company’s went bankrupt/ failed as CTO exited.
Got an opportunity to exercise recently from my old company as they raised a new round (2y after I left).
Should be a factor only if you’ll lapse out on a significant amount of grant. Some startups have monthly vesting.
PS. It was a small amount, also didn’t exercise cause the new round was at a lower valuation 🙃
Mind sharing company's name? Why did you decide to not exercise in the liquidity event? Please share what your reasons were, thanks
Small org, can’t reveal without doxxing. Didn’t exercise as I mentioned, lower payout than expected. Will consider in the next round
Following
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