I have recently left Tekion and was considering executing my ESOPs. For executing my ESOPs I need to pay around $3.5 per esop to the company. Should I convert my esops to equity? Am looking for some advice from the folks who might have done this in the past.
Hey 👋
I have worked with a lot of my clients who own ESOPs.
Some points to consider in your case:
Tekion is not a listed company. Finding a buyer for the shares will be difficult. Considering this, Are you comfortable holding the shares till IPO?
Tax: You will need to pay tax at the time of exercising ESOPs. Again, are you comfortable with paying tax upfront?
If you wish to sell shares through brokers, check if company has right of first refusal. This way, you can a good deal and sell the shares to company (prior to IPO).
Legendary advice. Wish I knew some of this before my first ESOPs.
Hi @YourStartupCA - Thanks for your reply. Following is some additional info - 1 - I can hold the shares to IPO. I am generally hodler. 2 - FMV is below my strike price, so I will not need to pay any tax. Please let me know if my understanding is correct that I need to pay the perquisites tax only on the differnece amount of Strike Price & FMV.
3 - How can I check this whether company allows me to sell the shares or not. As far as I remember Tekion are not allowed to sale the shares. But would like your help in knowing this further.
@Charliehebdo if FMV is lower than Strike price then it makes sense to buy the shares from open market instead of exercising the esops. You will save money. There are multiple platforms where people buy and sell unlisted shares of startups
The best way is to just exercise the esops. <imagine a normal distribution meme with both extremes saying this>
Noob here. Can anyone please explain to me - what is the difference between ESOP and Equity?
ESOPs is a contract that entitles you to buy x number of company shares (which are private) at a fixed (strike) price.
Equity is shares.
When you exercise your ESOPs you get equity
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I'm Kashish, the CEO of EquityList and Founder of Cloud Capital which I run as a solo GP. A little bit about what we do:
EquityList is a full-stack equity management platform by AngelList India. Companies across India,...
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