Firstly, it's a wild bet. Don't spend money banking on this as an investment. It's an investment with wild outcomes nevertheless.
Few things common in terms:
Could you please elaborate zero strike/exercise price?
Is it shares at face value of 10?
No, it's the pre decided amount that you have to pay to get every unit of share.
Taking an example of a publicly traded company, but the logic should stay the same.
As an example, if you have a contract with the strike price as 10 rupees, and the share is valued at 100.
That means that you pay 10 rupees per share to the company to "exercise" your option. And then you will be taxed on 100-10 according to the income tax rules.
If you have a contract saying that you will vest say 300 shares on a certain date, that means from that date till you exercise those shares, you will have to pay 10300 to the company, and the taxes to get shares worth 300100 in your demat account.
Now if the strike price is higher than the stick's valuation, that option is essentially worthless at that point in time, as you will be paying more than the share's value to get that stock.
I had a strike price of 1 rupee per share, and that seems fine to me. Don't chase an absolute zero strike price I think.
If you already have RSUs instead if ESOPs, do you have to pay tax to get them into your demat account or you can directly own them? Take an example of Google or Microsoft
Depends on the company. I have heard of 2 options.
One is you pay the full tax, and then get the shares credited. Another is where the company sells the shares needed to cover the taxes, and then credits the rest into your account.
But this is dependent on the company policy, one thing you can be sure of is that you will be taxed.
There was another post on this, try searching. Had good comments and suggestions.
I have 6 years experience. My current base/fixed is 60 LPA. (I also got a 5 lakh bonus and 5 lakh of my ESOPs vested this year making my total vested about 30 lakh. So the total comp is 70).
I'm being offered a senior engineer positi...
I’m considering joining as a founding engineer at an early stage startup who is just about to sign a $4M seed round.
They offered to match my current base and a $20,000 in ESOPs.
When joining at such early stage companies, how should ...
Someone please give some advice on how can one negotiate ESOPs? How to negotiate vesting period (if possible)? How to sell ESOPs? Can you sell ESOPs after you leave the company?
Do you need to purchase a company’s ESOPs(at a discounted...
Wanted to know and understand the reality behind the terms and conditions that new startups puts while promising ESOPs at the time of joining.
Please share ur experience so that everyone gets aware.
