Comment Some clarity (Score 2, Insightful) 122
There are two distinct roles you need to be aware of. An employee and an investor. An employee does the job, gets paid a salary and bears no risk. The only risk is that the company might go away and you will have to go be an employee somewhere else. Then there's an investor. As an investor you bear the risk of losing your investment which may mean losing your home if you've morgaged it to raise funding.
You can choose to be both by agreeing with your employer to take part of your salary and use it to purchase stock in the company you work for.
Stock options confuse the issue. Employers use options to give employees the illusion that they too are somehow investors and have a similar interest to founders and those who have purchased stock. Options are only worth something in the distant future when the company IPO's and even then their value is only the difference between the strike price and whatever the stock is being traded at.
With options you have no voting rights, no say in the day to day operations of the company, no right to see financial reports and in fact you don't even have the options until your vesting schedule says you have them.
Sure some employees have gotten rich from their options, but they are few and far between.
My advice:
1. Negotiate your salary without taking options into consideration because, lets face it, they're a long shot. Negotiate a salary that is appropriate for the level of risk/instability you feel you're exposed to.
2. Never confuse being an investor with holding a vesting schedule.
3. If you do want to be an investor, then negotiate a work-for-stock program with your boss and accept that you're risking a large part of your salary to invest in this company.
I'm a CEO who sold my first startup last year. I'm also a geek. I'm not at all a fan of options and often see them abused by CEO's managing employee perceptions.
Regards,
Mark M.
You can choose to be both by agreeing with your employer to take part of your salary and use it to purchase stock in the company you work for.
Stock options confuse the issue. Employers use options to give employees the illusion that they too are somehow investors and have a similar interest to founders and those who have purchased stock. Options are only worth something in the distant future when the company IPO's and even then their value is only the difference between the strike price and whatever the stock is being traded at.
With options you have no voting rights, no say in the day to day operations of the company, no right to see financial reports and in fact you don't even have the options until your vesting schedule says you have them.
Sure some employees have gotten rich from their options, but they are few and far between.
My advice:
1. Negotiate your salary without taking options into consideration because, lets face it, they're a long shot. Negotiate a salary that is appropriate for the level of risk/instability you feel you're exposed to.
2. Never confuse being an investor with holding a vesting schedule.
3. If you do want to be an investor, then negotiate a work-for-stock program with your boss and accept that you're risking a large part of your salary to invest in this company.
I'm a CEO who sold my first startup last year. I'm also a geek. I'm not at all a fan of options and often see them abused by CEO's managing employee perceptions.
Regards,
Mark M.
