Startup share options

S

StormCloud

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Hi all,
I've been working in a startup tech company for about two and a half years. At three years I can exercise some share options.
I may however have the opportunity to move to a new job in the next few weeks.
Although I have looked up some details on citizens information as regards tax I haven't been able to figure out if it is considered a good idea to exercise these options or whether to hang on at the company until doing so is even available.
Also if an employee does exercise these options and then leaves the company is it a requirement to give up the shares?

If anyone has any knowledge on any of this I would appreciate it.
Thanks
 
First things first...

You have to look at the agreement you have in place to decide what is allowed. I doubt if you can exercise the options before you leave. I would expect that they will expire if you leave before three years.

Then you have to look at the value of the options. What happens if you exercise the options? Do you pay money to the company to buy shares at a much reduced price? Are the shares quoted on a stock exchange? If the shares aren't really worth that much, then it shouldn't be a factor in changing your job.

However, if the shares are worth a lot more than the option price, then you might delay job hunting until you can exercise them.

Worry about the tax consequences later.

Brendan
 
I'd agree - your first port of call should be to check whatever agreements are in place around the options. However, it is highly unlikely you will be able to get anything of value if you leave. The whole point of options is to attract and more importantly retain good people. In most cases, if you leave you leave any value attached to options or shares is left behind. This is especially true if there is no market in the shares, as would be the case in most startups. In fact, until there is some form of exit event (e.g. floatation or trade sale) it is rare that anyone will get any real (as opposed to notional) return on options or indeed shares. Another scenario is where you exercise the option and get shares which are subsequently wiped out in a funding round. The rules and agreements around the option scheme should explain it all, though.
 
I have a lot of experience in this area. Send me a private message if you want some confidential advice.

I have been in your place three times, Vertel, Monetas, and last but not least the biggest smoke and mirrors act known to mankind, Baltimore Technologies.
 
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