<span id="mailbox-conversation"><span style="-webkit-text-size-adjust: auto; background-color: rgba(255, 255, 255, 0);">That's all well and good if you're still employed by the company when the liquidity event occurs. If you leave before then you have to exercise yourself. Most of my experience is with the US though, and the tax treatment is non-trivial to understand and has caused significant financial pain for no gain for a few acquaintances. I'll refrain from going into specific issues until Sam has closed out the survey for fear of tainting the results.</span></span><br><br><div class="gmail_quote"><p>On Mon, Aug 4, 2014 at 7:32 PM, Evgeny Shadchnev <span dir="ltr"><<a href="mailto:evgeny.shadchnev@gmail.com" target="_blank">evgeny.shadchnev@gmail.com</a>></span> wrote:<br></p><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex;">
<div dir="ltr">Glenn,<div><br></div>
<div>It may seem strange at first but there's a good reason for this. Also, it's not nearly as bad as it seems.</div>
<div><br></div>
<div>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).</div>
<div><br></div>
<div>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.</div>
<div><br></div>
</div>
<div class="gmail_extra">
<br><br><div class="gmail_quote">On Mon, Aug 4, 2014 at 3:24 PM, Glenn Gillen <span dir="ltr"><<a href="mailto:glenn@rubypond.com">glenn@rubypond.com</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">
<span>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. </span><div class="HOEnZb">
<div class="h5">
<br><br><div class="gmail_quote">
<p>On Mon, Aug 4, 2014 at 3:24 PM, Louis Goff-Beardsley <span dir="ltr"><<a href="mailto:louis@infinitiumglobal.com">louis@infinitiumglobal.com</a>></span> wrote:<br></p>
<blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><div>
<p class="MsoNormal"><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'>Hi Sam,
</span></p>
<p></p>
<p></p>
<p class="MsoNormal"><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'></span></p>
<p> </p>
<p></p>
<p class="MsoNormal"><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'>My experience with companies offering equity etc in companies as part of a package are as follows:</span></p>
<p></p>
<p></p>
<p class="MsoNormal"><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'></span></p>
<p> </p>
<p></p>
<p><span style="font-size:11.0pt;font-family:Symbol;color:#1f497d"><span>·<span style='font:7.0pt "Times New Roman"'>
</span></span></span><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'>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:</span></p>
<p></p>
<p></p>
<p style="margin-left:72.0pt">
<span style='font-size:11.0pt;font-family:"Courier New";color:#1f497d'><span>o<span style='font:7.0pt "Times New Roman"'>
</span></span></span><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'>The £10k-30k that developers would lose essentially would result in a significant drop in immediate lifestyle.</span></p>
<p></p>
<p></p>
<p style="margin-left:72.0pt">
<span style='font-size:11.0pt;font-family:"Courier New";color:#1f497d'><span>o<span style='font:7.0pt "Times New Roman"'>
</span></span></span><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'>The chance of a payoff with the equity being worth something is pretty risky, with more tech start-ups failing than succeeding.</span></p>
<p></p>
<p></p>
<p style="margin-left:72.0pt">
<span style='font-size:11.0pt;font-family:"Courier New";color:#1f497d'><span>o<span style='font:7.0pt "Times New Roman"'>
</span></span></span><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'>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.</span></p>
<p></p>
<p></p>
<p style="margin-left:108.0pt">
<span style="font-size:11.0pt;font-family:Wingdings;color:#1f497d"><span>§<span style='font:7.0pt "Times New Roman"'>
</span></span></span><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'>That being said I’ve met a few developers where its paid off and they’ve used that money to bankroll their own projects.</span></p>
<p></p>
<p></p>
<p><span style="font-size:11.0pt;font-family:Symbol;color:#1f497d"><span>·<span style='font:7.0pt "Times New Roman"'>
</span></span></span><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'>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.</span></p>
<p></p>
<p></p>
<p style="margin-left:72.0pt">
<span style='font-size:11.0pt;font-family:"Courier New";color:#1f497d'><span>o<span style='font:7.0pt "Times New Roman"'>
</span></span></span><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'>Obviously people are more included to stay with the company longer due to the Vesting/Cliff structure.</span></p>
<p></p>
<p></p>
<p style="margin-left:72.0pt">
<span style='font-size:11.0pt;font-family:"Courier New";color:#1f497d'><span>o<span style='font:7.0pt "Times New Roman"'>
</span></span></span><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'>Good way of getting employees to care about and feel invested in the success of the business.</span></p>
<p></p>
<p></p>
<p class="MsoNormal"><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'></span></p>
<p> </p>
<p></p>
<p class="MsoNormal"><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'>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.</span></p>
<p></p>
<p></p>
<p class="MsoNormal"><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'></span></p>
<p> </p>
<p></p>
<p class="MsoNormal"><span style='font-family:"Calibri","sans-serif";color:#1f497d'>Best, Louis.<b><br><br></b></span></p>
<p></p>
<p></p>
<p class="MsoNormal"><span style='font-family:"Calibri","sans-serif";color:#1f497d'>-<b><br>
Louis Goff-Beardsley</b></span><span style='font-family:"Calibri","sans-serif";color:#1f497d'></span></p>
<p></p>
<p></p>
<p class="MsoNormal"><b><span style='font-family:"Calibri","sans-serif";color:#1f497d'>Ultra-specialised Independent Ruby Recruìtment</span></b><span style='font-family:"Calibri","sans-serif";color:#1f497d'><br><a href="https://www.linkedin.com/in/louisbeardsley">https://www.linkedin.com/in/louisbeardsley
</a></span></p>
<p></p>
<p></p>
<p class="MsoNormal"><i><span style='font-family:"Calibri","sans-serif";color:#1f497d'>"I just can’t stop thinking about Ruby on Rails"</span></i><span style='font-family:"Calibri","sans-serif";color:#1f497d'></span></p>
<p></p>
<p></p>
<p class="MsoNormal"><b><span style='font-family:"Calibri","sans-serif";color:#1f497d'>Mobile:</span></b><span style='font-family:"Calibri","sans-serif";color:#1f497d'> 07449 324 851
<b>BBS:</b> 0118 327 1821</span></p>
<p></p>
<p></p>
<p class="MsoNormal"><b><u><span style='font-family:"Calibri","sans-serif";color:#1f497d'>Skype/Googletalk</span></u></b><span style='font-family:"Calibri","sans-serif";color:#1f497d'>: LouisGB1/<a href="mailto:LouisRoR@gmail.com">LouisRoR@gmail.com</a></span></p>
<p></p>
<p></p>
<p class="MsoNormal"><span style='font-family:"Calibri","sans-serif";color:#1f497d'><a href="https://twitter.com/LouisRoR">@LouisRoR</a></span></p>
<p></p>
<p></p>
<p class="MsoNormal"><span style='font-family:"Calibri","sans-serif";color:#1f497d'><a href="http://irc.freenode.org">irc.freenode.org</a> - LouisRoR - #Ruby #LRUG #NWRUG #Pokemonchat</span></p>
<p></p>
<p></p>
<p class="MsoNormal"><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d'></span></p>
<p> </p>
<p></p>
<p class="MsoNormal"><b><span lang="EN-US" style='font-size:11.0pt;font-family:"Calibri","sans-serif"'>From:</span></b><span lang="EN-US" style='font-size:11.0pt;font-family:"Calibri","sans-serif"'> Chat [mailto:<a href="mailto:chat-bounces@lists.lrug.org">chat-bounces@lists.lrug.org</a>]
<b>On Behalf Of </b>Sam Phillips<br><b>Sent:</b> 02 August 2014 12:01<br><b>To:</b> London Ruby Users Group<br><b>Subject:</b> [LRUG] Equity/Stock/Share Options: Survey</span></p>
<p></p>
<p></p>
<p class="MsoNormal"></p>
<p> </p>
<div>
<p class="MsoNormal">Hi LRUG,</p>
<p></p>
<div>
<p class="MsoNormal"></p>
<p> </p>
</div>
<div>
<p class="MsoNormal">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.</p>
<p></p>
</div>
<div>
<p class="MsoNormal"></p>
<p> </p>
</div>
<div>
<p class="MsoNormal">I'm not so much thinking about whether or not these schemes are a good idea or worth sacrificing salary for.</p>
<p></p>
</div>
<div>
<p class="MsoNormal"></p>
<p> </p>
</div>
<div>
<p class="MsoNormal">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.</p>
<p></p>
</div>
<div>
<p class="MsoNormal"></p>
<p> </p>
</div>
<div>
<p class="MsoNormal"><a href="https://www.surveymonkey.com/s/MFFGZSH">https://www.surveymonkey.com/s/MFFGZSH</a></p>
<p></p>
</div>
<div>
<p class="MsoNormal"></p>
<p> </p>
</div>
<div>
<p class="MsoNormal">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 :)</p>
<p></p>
</div>
<div>
<p class="MsoNormal"></p>
<p> </p>
</div>
<div>
<p class="MsoNormal">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.</p>
<p></p>
</div>
<div>
<p class="MsoNormal"></p>
<p> </p>
</div>
<div>
<p class="MsoNormal">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!).</p>
<p></p>
</div>
<div>
<p class="MsoNormal"></p>
<p> </p>
</div>
<div>
<p class="MsoNormal">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.</p>
<p></p>
</div>
<div>
<p class="MsoNormal"></p>
<p> </p>
</div>
<div>
<p class="MsoNormal">If you could take two minutes, that would be ace. Thank you so much!</p>
<p></p>
</div>
<div>
<p class="MsoNormal"></p>
<p> </p>
</div>
<div>
<p class="MsoNormal">Sam</p>
<p></p>
</div>
</div>
</div></blockquote>
</div>
<br></div>
</div>
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