SillyJellybean
SillyJellybean

Tekion ESOPs Execution

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.

16mo ago
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JumpyWaffle
JumpyWaffle

Hey 👋

I have worked with a lot of my clients who own ESOPs.

Some points to consider in your case:

  1. 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?

  2. Tax: You will need to pay tax at the time of exercising ESOPs. Again, are you comfortable with paying tax upfront?

  3. 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).

MagicalQuokka
MagicalQuokka

Legendary advice. Wish I knew some of this before my first ESOPs.

SillyJellybean
SillyJellybean

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.

GigglyRaccoon
GigglyRaccoon

@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

SillyJellybean
SillyJellybean

FMV is lower than strike price but Market value is significantly higher.

MagicalQuokka
MagicalQuokka

FMV = fair market value

I did not understand how market value is higher?

SwirlyBoba
SwirlyBoba

The best way is to just exercise the esops. <imagine a normal distribution meme with both extremes saying this>

PrancingNoodle
PrancingNoodle
Amazon16mo

Noob here. Can anyone please explain to me - what is the difference between ESOP and Equity?

GoofyPancake
GoofyPancake

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

DerpyNarwhal
DerpyNarwhal
Zepto16mo

They are offering me 6k stock units. How much will it be in INR?

FluffyNoodle
FluffyNoodle
Student16mo

Lol I'm in notice period in tekion and thinking should buy the stocks or not. What's your advice?

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