More advice: Stock options

by bboyneko 11 Replies latest jw friends

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  bboyneko

  My new job is setting aside 15% of their shares for employee stock options, to be distributed equally per employee (excluding CEO's) I am the first employee. They plan on selling this company in 2 years for $100,000,000.00 So 15% of that is 15 million. There will be 30 employees at most at that time. Does this mean at the end of 2 years I will recieve $500,000? Is that how stock options work? If that's how it works I will be a happy clam in 2 years.

  They have good benefits too, 100% health and beer on the job.
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  Naeblis

  I dont know. BUt if it does, you'll be needing some yes men sir. Did I mention that shirt looks fabulous on you?
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  Stephanus

  $100m in 2 years? I'd be asking some hard questions about how they arrive at that estimate. I'd also be VERY careful if you are asked to contribute any of your own money towards these options...
• 

  Simon

  options are just that ... "options" to buy

  it doesn't mean you get the shares for nothing but you have an option to buy them at a set price.

  (something like that)
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  Naeblis

  You might not be able to sell your stocks for a few years after it goes public as well.
• 

  Makena1

  Bboy - Does this mean that we will be seeing you more often at the Russian Tea Room, the steam room at the Printing House Fitness and Racquet Club, and at Scores?

  Seriously, congratulations and best wishes for continued success. Jdubla could better explain stock options and how they work. I know its a little more involved than you outlined - there are timeframes in order to exercise the options, waiting periods to buy and sell etc etc.

  Best regards,
  Mak

  Some men worship rank, some worship heroes, some worship power, some worship God, & over these ideals they dispute & cannot unite--but they all worship money.
  - Mark Twain
• 

  Valis

  bboy, here are some links that might help.

  http://www.phlx.com/products/stockops/stock4.html

  This site has quite a few docs in PDF format, which might help explain Options, and might be something you might want to sahre w/ employees.

  http://www.888options.com/store/free_lit.jsp

  This is a national org that you might want to look into as well...

  http://www.nceo.org/

  Hope some of this helps. Math is not my strong suit, but finding stuff is.

  Sincerely,

  District Overbeer
• 

  ConnieLynn

  bboyneko - I might be able to help, but need a little more info-

  Stock options only have value when vested.
  
  If your vested, the value of the stock option is the difference in the market value of stock & the exercise price of the option. (If your company is publicly traded, the market value is easy to determine. If it is a closely held company, market value is more difficult to determine) Also, find out if the options are ISO or NQSO, they work differently.

  Let me know - Connie
• 

  Double Edge

  It means they'll set aside $15mm paper dollars to be distributed to the employees... you still have to "buy" the shares (no out of pocket money though)

  Let's say you get 1000 shares of the stock at the purchase price of $10/share (which equals $10,000 - they give that to you on paper). After 2 years the stock price is now $25/share. Your 1,000 shares are now worth $25,000...If you decided to "cash" in your option, you would have to "pay" for the 1,000 shares at the original price of $10,000. So it would be $25,000 minus $10,000...you would end up with $15,000.
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  Double Edge

  the above is just an example. The missing element in the equation is what the price of the stock is on the date you're granted the stock. Options are the right, but not the obligation to purchase stock at a set price.