[LRUG] Equity/Stock/Share Options: Survey

[Evgeny Shadchnev]

Glenn,

It may seem strange at first but there's a good reason for this. Also, it's
not nearly as bad as it seems.

The reason is that the right to buy something cannot be taxed, whereas
shares can. So if a business gives shares to the employee, HMRC will expect
the employee to pay taxes today, even if the shares cannot be sold yet.
This is why EMI exists: you get the right to buy the shares but you cannot
be taxed until later (and only at 10% instead of a normal rate of twenty
something).

The reason it's not as bad is because normally during a liquidity event the
purchase and the sale would happen on the same day without you having to
provide any cash. I went through this process twice and on both occasions I
just received the net difference between the strike price and the share
price at the liquidity event.



On Mon, Aug 4, 2014 at 3:24 PM, Glenn Gillen <glenn at rubypond.com> wrote:

> The pattern I've seen most regularly and that I find particularly
> distasteful and borderline exploitative is below market rates and "equity"
> in the form of options. So not only are you taking a pay cut, but at some
> point in the future you need to find additional cash to exercise those
> options and actually get your equity.
>
>
> On Mon, Aug 4, 2014 at 3:24 PM, Louis Goff-Beardsley <
> louis at infinitiumglobal.com> wrote:
>
>> Hi Sam,
>>
>>
>>
>> My experience with companies offering equity etc in companies as part of
>> a package are as follows:
>>
>>
>>
>> ·         Regularly get companies asking me I can market mid & senior
>> developer positions with a below market rate salaries but with significant
>> equity. Usually its companies at a fairly early stage that are interested
>> in this sort of proposition. Rarely do these roles get filled with this
>> sort of package. Reasons for this are:
>>
>>  o   The £10k-30k that developers would lose essentially would result in
>> a significant drop in immediate lifestyle.
>>
>>  o   The chance of a payoff with the equity being worth something is
>> pretty risky, with more tech start-ups failing than succeeding.
>>
>>  o   Most Upper-mid and above developers will usually have picked-up
>> various bits of equity from all over the place throughout their career,
>> often can be jaded about its value. Only a few times I’ve met developers
>> who took equity and it paid off.
>>
>>  §  That being said I’ve met a few developers where its paid off and
>> they’ve used that money to bankroll their own projects.
>>
>> ·         When a company is offering market Salary rates + equity as
>> part of total package it’s a lot more easy to market them. Often it can be
>> the deciding factor when candidates are choosing between roles.
>>
>>  o   Obviously people are more included to stay with the company longer
>> due to the Vesting/Cliff structure.
>>
>>  o   Good way of getting employees to care about and feel invested in
>> the success of the business.
>>
>>
>>
>> To summarise:  Most people wouldn’t like to spend a significant portion
>> of my wages on scratch cards, but would be attracted to them if given on
>> top of a regular salary.
>>
>>
>>
>> Best, Louis.
>>
>>  -
>> * Louis Goff-Beardsley*
>>
>> *Ultra-specialised Independent Ruby Recruìtment*
>> https://www.linkedin.com/in/louisbeardsley
>>
>> *"I just can’t stop thinking about Ruby on Rails"*
>>
>> *Mobile:* 07449 324 851 *BBS:* 0118 327 1821
>>
>> *Skype/Googletalk*: LouisGB1/LouisRoR at gmail.com
>>
>> @LouisRoR <https://twitter.com/LouisRoR>
>>
>> irc.freenode.org - LouisRoR - #Ruby #LRUG #NWRUG #Pokemonchat
>>
>>
>>
>> *From:* Chat [mailto:chat-bounces at lists.lrug.org] *On Behalf Of *Sam
>> Phillips
>> *Sent:* 02 August 2014 12:01
>> *To:* London Ruby Users Group
>> *Subject:* [LRUG] Equity/Stock/Share Options: Survey
>>
>>
>>
>> Hi LRUG,
>>
>>
>>
>> I've had a few anecdotal conversations about equity (option) schemes over
>> the past few years and the way that they work in practice with real people
>> in real companies where relationships are sometimes complex.
>>
>>
>>
>> I'm not so much thinking about whether or not these schemes are a good
>> idea or worth sacrificing salary for.
>>
>>
>>
>> I'm hoping to come up with a more definitive view on what's going on so
>> have put together a simple survey. If you are part of a company option
>> scheme, or have been in the past, and could spend 2 minutes (it's 10 quick
>> questions) on it, that would awesome.
>>
>>
>>
>> https://www.surveymonkey.com/s/MFFGZSH
>>
>>
>>
>> My motivation is to see if there are are trends in the way things are
>> happening and to allow us to share our experiences. My (broad) hypothesis
>> is that implementation of these schemes in practice is inconsistent across
>> companies. My detailed hypothesis I'll reveal when I have some data :)
>>
>>
>>
>> I'll be sharing anonymised raw data (providing I actually get some, and
>> participants agree), and will hopefully be able to break this down with
>> some basic analysis too.
>>
>>
>>
>> As a few of you know, I'm not a statistician, so this is not very
>> scientific! Any feedback on how to better collect this sort of data is
>> happily received although I'll probably not want to change the questions
>> half way through the sample period (again, you can tell me different if I'm
>> wrong!).
>>
>>
>>
>> My aim right now is simply to get more data, learn more about what's
>> going on, and to maybe start an open conversation on the topic.
>>
>>
>>
>> If you could take two minutes, that would be ace. Thank you so much!
>>
>>
>>
>> Sam
>>
>>
>
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