Share Option

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Parazard2

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So...I am fairly clueless about anything financial so any help here will be greatly appreciated. I am one of the first employees of a company that has been steadily growing and in the early days I was offered some share options that have now vested.
I am debating whether to move on to greener pastures and am weighing up the pros and cons of such a move.
I am aware that if I left now I would have to buy these shares (at the price of when I was given then) and pay the appropriate tax on it.
However I am not sure whether I would be mad leaving share options behind. I was 'promised' these would end up paying off my mortgage in the long term (was told this by a boss whose word I would not trust for a second tbh) but I am not convinced they would amount to much (or certainly not THAT much). If they are worth as little as I suspect I would be better off moving on to somewhere that has benefits like pension, paid maternity leave etc. So my question is: how do I know/find out whether my share options are likely to come to anything worth hanging around for?
 
Have you seen the accounts of the company?

Is it profitable?

Has it a technology which others might pay over the odds to buy?

Who controls the company?

Has there been any fund-raising?

As a general rule, you should put your career and enjoying and trusting the people you work with, ahead of some gain, which might or might not materialise.

Brendan
 
Thanks for the reply. Indeed this is only just one of the factors I am considering alongside several other ones (and bearing in mind nowhere is perfect and also that there are some privileges gained from seniority, which I would most likely have to re-conquer from scratch somewhere else).
I do not have the answers to any of the above, other than knowing that yes there is more fundraising underway. How do I find out the answers to the other questions?
 
Share options can be a true benefit particularly where you were granted them in the early days. The big disadvantage of them, as I think you have worked out, is that the exercise of options to get the shares will trigger a tax liability of 52% of the difference between what you pay for the option and what the share is worth (at date of exercise). If there is no market in the shares (i.e meaning that the company isn't quoted) then exercise may create a tax liability with no way of paying it. The questions I would ask are:
1. is the company quoted on a stock market. If so I don't see why you can't exercise the options, sell the shares to pay your tax and keep the balance. You can walk away into the sunset.
2. do the options lapse if you leave the company? Look at the option grant, or other documentation, to see if there are good and bad leaver provisions. If so say what these say about people who leave the company in relation to the options (i.e. do they lapse or get forfeited). If the documentation says nothing about such leaver provisions then you may be able to leave without having the options lapse.
3. While I appreciate that the options may have vested can they be exercised? In many circumstances options may vest but can only be exercised in a 'liquidity' event. This means that the options can only be exercised when either quoted or when the company is being sold.
 
Amazing. Thank you so much for all of this info. I guess all I need to do is figure out how to get answers to the above questions (all I know is that it is not quoted on a stock market). I don't think the paper they gave me in relation to this specified any of this...
 
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