Don't understand employee stock options

[jackneenach]

Watch out!

I have been unemployed for 3 months now. When I was working I would get calls from recruiters. They would offer $10-20-30K more money to change jobs. I told them I had incentive stocks in the company. If I leave I lose the stocks. The company ran out of money. The contract stated that if I get laid off I keep the stocks. So I have my stocks. I should be happy. Problem is that now that I am unemployed those same recruiters do not want to talk to me. When you are unemployed you become a pariah. The world is not kind to you when you are "on the street". Meaning out of work.

These kinds of stocks will limit your mobility. Worse. They will force you to stay in a company even when your common sense brain will tell you it is time to leave.

[Jeo123]

Originally Posted by jackneenach

Watch out!

I have been unemployed for 3 months now. When I was working I would get calls from recruiters. They would offer $10-20-30K more money to change jobs. I told them I had incentive stocks in the company. If I leave I lose the stocks. The company ran out of money. The contract stated that if I get laid off I keep the stocks. So I have my stocks. I should be happy. Problem is that now that I am unemployed those same recruiters do not want to talk to me. When you are unemployed you become a pariah. The world is not kind to you when you are "on the street". Meaning out of work.

These kinds of stocks will limit your mobility. Worse. They will force you to stay in a company even when your common sense brain will tell you it is time to leave.

It's hardly something to "watch out" for. Anytime you look to leave a company, you need to run a few numbers. For a person without a stock option bonus, they still need to figure out how much they're leaving on the table in terms of 401(k) match and possible end of year bonuses. If the salary jump isn't enough, maybe the new company will offer you a sign on bonus to offset the loss.

Even then, sometimes it's worth it. I was at a company that was underpaying me vs market, but had a tuition reimbursement program that I was using to get my MBA. That progrm basically said every 6 months, 25% of a tuition check was vested. So if I paid $10,000 for this semester, leaving in 1 year means I would have had to pay back $5,000.

When I left the company, I had to pay them $18,000 within 3 months. Not exactly fun, but at the same time, my raise was for more than $20k, so it was worth it since I would be even within a year and ahead for the rest of my career afterwards.

Stock options are no different. It doesn't "limit" your mobility, it just gives you an incentive not to leave. That being said, money can easily make for an even bigger incentive to leave.

[jackneenach]

I had a special case. Medical technology. Requires government (FDA) approval. If/when the product I developed gets the approval in the future I will be a rich man. A little difficult to walk away from a deal like that. I know it's a free country I could have done what I wanted. If you were in my shoes you would stay. I am glad I stayed. I do not regret it. Nevertheless there is a price to pay.

I am just saying that the same recruiter who calls you and is very gracious when you have a job will ignore you once you are laid off. All of the green lights that you see when you are working turn into yellow and red lights the moment you get laid off.

[charlygal]

Originally Posted by awestover89

I'm thinking it sounds like standard options, where after a vesting period I will be able to exercise. Of course, the more research I do the more concerned I get as to the actual value, just because it is a private company and apparently that can make it harder to sell shares when you want to. Of course the pay itself is plenty, so the options are just a bonus but I was looking forward to eventually getting a nice bonus out of selling them.

Maybe the company will go public or get sold.

When UPS went public, there were some drivers that became instant millionaires