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STOCK OPTIONS AND START-UPS

December 17th, 2014 Posted by

You just traded in your high paying salary and a plethora of benefits in exchange for 100-hour work-weeks and a modest equity stake in a start-up company because you think you have just signed on with the next Facebook or Google.   Please keep in mind, however, that stock options do not put food on the table or pay your mortgage. They are future incentives used by small companies, particularly start-ups, to lure high-priced talent away from better paying jobs, because equity is all these companies have of potential value to offer.   What tends to get lost in the excitement of the moment is that options and restricted stock are an enticement that can be lost at a moments notice due to dilution or termination well prior to any significant corporate event.

I am not suggesting that you stay away from all start-ups or that you should turn down the options offered.  I am simply suggesting that you consider the job on its merits and not because someday, maybe, your options may be worth millions.