Stock Options in a Company

Carta Blogs

Strike Prices and Dilution https://carta.com/blog/equity-101-stock-economics/ How Stock Options are Taxed: https://carta.com/blog/equity-101-exercising-and-taxes/

Interesting Insight From Early Microsoft Employee on Stock Options

https://medium.com/@sam_96607/stock-options-why-its-time-for-startups-to-replace-them-a38ceec534d5

Interesting Compensation Structure By Netflix

https://benefits.netflix.com/united-states/financial

What are Grants

• Grants are when the Board of Directors issue a stock option to you at fair market value, so upon issuance the stock option has no value, but people expect the value of the underlying company to go up
  • 409a evaluation is when your company is evaluated

Typically equity is vested over 4 year vesting period

• Typically you need to wait 1 year before your vesting period starts

Common Stock

• employees receive

Preferred Stock

• investors receive

When company raises new funds, the company usually create new shares to give to that investor. This dilutes your shares in the company (so the amount of value in your stock goes down)

Early exercise- you can vest your shares prior to the ending of the time horizon

Acceleration- If company that you have yet to vest shares for gets acquired, then you can vest your shares before the time horizon

Incentive Stock Option

• vesting can’t be taxed
• only available to employees

Non qualified stock option

• vesting can be taxed