Can anyone try and explain my options I have vested?
Discussion
I've worked at my company since Jan 2019. Every so often I get an email saying "Congratulations! You have vested new XXXXX, Inc. options"
The last email I got 11 days ago told me I have vested 89.4% of my options. 21st Jan I'll be fully vested.
I really don't know what this means, exactly. We're not a publicly traded company, but there's always talking about IPO, but it's not happening soon I don't think.
Does all this vesting stuff mean I have money coming to me? Shares? Nothing? Something? Do I need to buy shares? And then sell them?
The last email I got 11 days ago told me I have vested 89.4% of my options. 21st Jan I'll be fully vested.
I really don't know what this means, exactly. We're not a publicly traded company, but there's always talking about IPO, but it's not happening soon I don't think.
Does all this vesting stuff mean I have money coming to me? Shares? Nothing? Something? Do I need to buy shares? And then sell them?
When you are awarded an option it has a strike price on the date of the award. However, the option vests over time and you can only cash in vested options.
When you exercise the option typically you buy the stock at the strike price and simultaneously sell the stock at the price on date of exercise. You would only exercise the option if the value is higher then the original strike price.
When you exercise the option typically you buy the stock at the strike price and simultaneously sell the stock at the price on date of exercise. You would only exercise the option if the value is higher then the original strike price.
RDMcG said:
When you are awarded an option it has a strike price on the date of the award. However, the option vests over time and you can only cash in vested options.
When you exercise the option typically you buy the stock at the strike price and simultaneously sell the stock at the price on date of exercise. You would only exercise the option if the value is higher then the original strike price.
So it's all to do with shares in the company? But as we're not publicly traded, how does that work? Surely that means there are no shares to buy? When you exercise the option typically you buy the stock at the strike price and simultaneously sell the stock at the price on date of exercise. You would only exercise the option if the value is higher then the original strike price.
There are shares, it is just there is probably no internal market to sell them.
So in reality, all you can do is sit on them until something happens enabling you to realise the value of them (e.g. the IPO you mention, or perhaps the company being sold).
Is it a UK company? If so, you should be able to find the company on the companies house website and might even see your shareholding in one of the docs.
So in reality, all you can do is sit on them until something happens enabling you to realise the value of them (e.g. the IPO you mention, or perhaps the company being sold).
Is it a UK company? If so, you should be able to find the company on the companies house website and might even see your shareholding in one of the docs.
fat80b said:
There are shares, it is just there is probably no internal market to sell them.
So in reality, all you can do is sit on them until something happens enabling you to realise the value of them (e.g. the IPO you mention, or perhaps the company being sold).
Is it a UK company? If so, you should be able to find the company on the companies house website and might even see your shareholding in one of the docs.
Ah ok I think I get it. So in reality, all you can do is sit on them until something happens enabling you to realise the value of them (e.g. the IPO you mention, or perhaps the company being sold).
Is it a UK company? If so, you should be able to find the company on the companies house website and might even see your shareholding in one of the docs.
No, we're a US company, with a UK (and other) regional office.
and you probably received some paperwork / had to sign something to accept them at some point, and in that there are usually some clauses around expiry in there as well which might be worth reading.
And probably the most important thing is that if you are nearly 100% vested, then you probably want to speak to your manager to make sure that they give you some more!!
No point in unlocked golden handcuffs or something.....
And probably the most important thing is that if you are nearly 100% vested, then you probably want to speak to your manager to make sure that they give you some more!!
No point in unlocked golden handcuffs or something.....
fat80b said:
and you probably received some paperwork / had to sign something to accept them at some point, and in that there are usually some clauses around expiry in there as well which might be worth reading.
And probably the most important thing is that if you are nearly 100% vested, then you probably want to speak to your manager to make sure that they give you some more!!
No point in unlocked golden handcuffs or something.....
Ok thanks, I'll start asking some questions. I'm guessing the idea in an ideal world is that having worked there for a while these should be worth some (a lot?) of money to me? And probably the most important thing is that if you are nearly 100% vested, then you probably want to speak to your manager to make sure that they give you some more!!
No point in unlocked golden handcuffs or something.....
UTH said:
fat80b said:
and you probably received some paperwork / had to sign something to accept them at some point, and in that there are usually some clauses around expiry in there as well which might be worth reading.
And probably the most important thing is that if you are nearly 100% vested, then you probably want to speak to your manager to make sure that they give you some more!!
No point in unlocked golden handcuffs or something.....
Ok thanks, I'll start asking some questions. I'm guessing the idea in an ideal world is that having worked there for a while these should be worth some (a lot?) of money to me? And probably the most important thing is that if you are nearly 100% vested, then you probably want to speak to your manager to make sure that they give you some more!!
No point in unlocked golden handcuffs or something.....
R.
fat80b said:
There are shares, it is just there is probably no internal market to sell them.
So in reality, all you can do is sit on them until something happens enabling you to realise the value of them (e.g. the IPO you mention, or perhaps the company being sold).
That doesn’t automatically follow.So in reality, all you can do is sit on them until something happens enabling you to realise the value of them (e.g. the IPO you mention, or perhaps the company being sold).
What he’s got and what he can do with them will depend on the terms of the company scheme and the provisions they make.
For example, they could be pure equity for which, as you say, there may be no exit options until IPO.
Alternatively they could be part of any employee share scheme where the company will give employees the opportunity to sell at the latest price (often with the company then recycling those bought back shares are part of an employee pool).
There simply hasn’t been enough information provided by the OP to know what he’s got and what he can do about the vested options.
ETA: the scheme rules are obviously key to the above, as (if they’re vested options rather than actual,equity) are expiry dates to exercise, but the big thing (and your company should guide you on this) is your tax position.
Edited by LooneyTunes on Thursday 1st September 20:17
and typically with a US company there will be a broker in between. My last 3 employers (~2.5K employees, ~75K employees then ~1.5K employees) have all used Morgan Stanley. I get a login for them and can see what i have access to.
Like others say if you are pre IPO i am not sure you will be able to make benefit of them but at the same time if your company float they shoudl be worth something and if they are all vested they will be sitting there ready to sell on IPO day.
Check the emails you are getting for who the broker is. Invariably your username is your company email, try get logged in and see what you have.
Like others say if you are pre IPO i am not sure you will be able to make benefit of them but at the same time if your company float they shoudl be worth something and if they are all vested they will be sitting there ready to sell on IPO day.
Check the emails you are getting for who the broker is. Invariably your username is your company email, try get logged in and see what you have.
As said the devil is in the detail.
But usually options best over a windows, say four years and very quarter you get more,
When in the open market it means you can exercise and keep / sell as you wish, often with a sell to cover so you don’t actually hand over money.
Clearly pre-ipo you can’t sell them. But the chances are you could actually buy them.
Depending on circumstances this could actually be a wise thing to do, but is a big gamble with actual money.
You would need to do the calculations etc.
If it’s far enough out it also opens the opportunity to transfer some to a spouse which is a CGT sensible thing to do.
But as always it depends, and for us hindsight is a wonderful thing.
But usually options best over a windows, say four years and very quarter you get more,
When in the open market it means you can exercise and keep / sell as you wish, often with a sell to cover so you don’t actually hand over money.
Clearly pre-ipo you can’t sell them. But the chances are you could actually buy them.
Depending on circumstances this could actually be a wise thing to do, but is a big gamble with actual money.
You would need to do the calculations etc.
If it’s far enough out it also opens the opportunity to transfer some to a spouse which is a CGT sensible thing to do.
But as always it depends, and for us hindsight is a wonderful thing.
Advice to the OP, completely unsolicited so please feel free to ignore!
Be a bit more nosey about this stuff, I am not being judgemental, well i am, but with humour, i am surprised you have an element of your compensation that you are so vague on.
TBF - in a previous employment i had a couple of the girls who worked as PAs/Events/Marketing who got RSUs like you, they would giggle and say they didn't really understand but i assumed someone somewhere would take them aside and explain. It was only in the run up to a significant life event one came to me and said, like the OP, "eh what does this mean - you seem to bore people about them - please help".....we had a quick look in her MS account and she had the guts of $100K from about 8 years worth of modest RSU allocations she had never exercised. The company had IPO'd at $8/share, 9 years later was acquired at $55/share so while not huge numbers of shares involved because they had done nothing the full value was sat there.
Be a bit more nosey about this stuff, I am not being judgemental, well i am, but with humour, i am surprised you have an element of your compensation that you are so vague on.
TBF - in a previous employment i had a couple of the girls who worked as PAs/Events/Marketing who got RSUs like you, they would giggle and say they didn't really understand but i assumed someone somewhere would take them aside and explain. It was only in the run up to a significant life event one came to me and said, like the OP, "eh what does this mean - you seem to bore people about them - please help".....we had a quick look in her MS account and she had the guts of $100K from about 8 years worth of modest RSU allocations she had never exercised. The company had IPO'd at $8/share, 9 years later was acquired at $55/share so while not huge numbers of shares involved because they had done nothing the full value was sat there.
supersport said:
Clearly pre-ipo you can’t sell them.
<snip>
If it’s far enough out it also opens the opportunity to transfer some to a spouse which is a CGT sensible thing to do.
Again, not necessarily. It’s not uncommon for there to be some (albeit often limited) secondary activity in pre-IPO shares. <snip>
If it’s far enough out it also opens the opportunity to transfer some to a spouse which is a CGT sensible thing to do.
It’s could be the case if he bought the shares that:
Someone else in the company wants to buy them off him.
An existing/incoming investor wants to buy them.
He can’t sell them to anyone, his wife included, because shareholders agreements/class of shares restrict who can hold them, or there are hoops to jump through if he is able to do so.
He needs to be reading his scheme rules to work out what he can/cat’t do.
Depending on the above, sums involved, and the timing/likelihood of an IPO it could also be worth exploring whether placing some into Trust(s) for children would be worthwhile.
cavey76 said:
Advice to the OP, completely unsolicited so please feel free to ignore!
Be a bit more nosey about this stuff, I am not being judgemental, well i am, but with humour, i am surprised you have an element of your compensation that you are so vague on.
TBF - in a previous employment i had a couple of the girls who worked as PAs/Events/Marketing who got RSUs like you, they would giggle and say they didn't really understand but i assumed someone somewhere would take them aside and explain. It was only in the run up to a significant life event one came to me and said, like the OP, "eh what does this mean - you seem to bore people about them - please help".....we had a quick look in her MS account and she had the guts of $100K from about 8 years worth of modest RSU allocations she had never exercised. The company had IPO'd at $8/share, 9 years later was acquired at $55/share so while not huge numbers of shares involved because they had done nothing the full value was sat there.
Thanks all, and yes I admit it's been pretty useless of me not to know more about this. Be a bit more nosey about this stuff, I am not being judgemental, well i am, but with humour, i am surprised you have an element of your compensation that you are so vague on.
TBF - in a previous employment i had a couple of the girls who worked as PAs/Events/Marketing who got RSUs like you, they would giggle and say they didn't really understand but i assumed someone somewhere would take them aside and explain. It was only in the run up to a significant life event one came to me and said, like the OP, "eh what does this mean - you seem to bore people about them - please help".....we had a quick look in her MS account and she had the guts of $100K from about 8 years worth of modest RSU allocations she had never exercised. The company had IPO'd at $8/share, 9 years later was acquired at $55/share so while not huge numbers of shares involved because they had done nothing the full value was sat there.
I suppose I've not really been that bothered to know more about it until I've started to approach the date when I've vested 100% of my options, and also I did have it in my head than none of it means anything until we IPO anyway
I've occasionally asked my colleagues about it, and they sound as clueless as me about it all, so we're not really helping each other.
Many many people in our company put their head in the sand.
We IPOd and later got bought by a private equity company so they had to deal with it all in one go with opportunity to plan.
It was very clear that some very smart people just couldn’t understand it. I do think they just panicked.
That it was all in dollars just added to their confusion.
Our company did explain things but you do need some research to understand what it meant.
The main thing is to find out what your deal is and then you can decide.
We couldn’t sell pre-ipo but in hindsight those that took the large risk and bought long before ipo were able to transfer some to their spouses having held them long enough.
The chances are that there is nothing you can do until the IPO takes place. But it’s good to understand what it all means.
We IPOd and later got bought by a private equity company so they had to deal with it all in one go with opportunity to plan.
It was very clear that some very smart people just couldn’t understand it. I do think they just panicked.
That it was all in dollars just added to their confusion.
Our company did explain things but you do need some research to understand what it meant.
The main thing is to find out what your deal is and then you can decide.
We couldn’t sell pre-ipo but in hindsight those that took the large risk and bought long before ipo were able to transfer some to their spouses having held them long enough.
The chances are that there is nothing you can do until the IPO takes place. But it’s good to understand what it all means.
There will be an options agreement. For an employee in your position the important points are, what happens if you leave before exercising(on vested options). Usually you have a window. Also, what is the expiry of the existing options. Taxes are brutal(treated as income) and in the UK you will most likely(check) have to pay both employer and employee NI, assuming it's not an EMI scheme which is limited to C suite.
HR should be able to help you understand the strike, expiry and exercising channels.
HR should be able to help you understand the strike, expiry and exercising channels.
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