[richardhenry]

Regarding stock options expiring 3 months after leaving the company, it doesn't have to be this way and a lot of startups are moving in the direction of 10 year exercise periods.

I think Quora was the first to do this: https://dangelo.quora.com/10-Year-Exercise-Periods-Make-Sens...

[birken]

Zach Holman has a great article about it: https://zachholman.com/posts/fuck-your-90-day-exercise-windo...

And keeps an ongoing list of companies that offer extended exercise windows: https://github.com/holman/extended-exercise-windows

As somebody who has personally experienced every aspect of the stock option lifecycle (which fortunately worked out for me), I would never take a job at a company [1] if they didn't have an extended exercise window. The 90 day expiration period creates a massive gap between the risk/reward of equity for founders and the risk/reward of equity for employees, when the whole point of giving equity is to align those.

1: Assuming it was the type of company that compensated people with stock options

[smoodles]

I'm not sure about "a lot of startups", I'm personally only aware of a very few that are doing this. Word on the street that I hear is that maaaaybe your current employer might do this for employees they like, but not as a consistent policy. Many board members, founders, etc... feel they will take a retention hit if they were to implement something like this.

I personally think the status quo is insane, and I will never take another role with a options component of the package that does not have a policy like this.

[doh]

We do it. And I know of many startups that also followed Quora's example. Definitely not everybody does it, but also it's more than 0.

[chimeracoder]

> Regarding stock options expiring 3 months after leaving the company, it doesn't have to be this way and a lot of startups are moving in the direction of 10 year exercise periods.

This requires converting all options to NSOs, and the tax implications of NSOs are not pretty. (From a tax perspective, ISOs aren't great[0], but they're much better for employees, by design).

[0] You have to pay AMT on the spread between the option price and current value at the time you exercise, whether or not the equity is liquid, so you could end up paying a large tax bill only to find that the company goes bankrupt before you have the opportunity to ever sell your equity.

[epa]

The kicker here is that the option life is 10 years, even if you have left the company. So you can avoid tax by not exercising until you plan to sell. It becomes a personal choice between 1) do i want the option still, even if i quit, and 2) do i plan to have ownership in the company for a period longer than a year before i sell. Typically most people would prefer 1 over 2.

Keep in mind for someone reading this comment, this is about private companies.

[ssalazar]

What are the tax implications of NSOs? ISOs are a pretty huge gamble, basically a lotto ticket, if you leave before a liquidity event occurs or is known to be on the near horizon.

[matthewowen]

Have any startups with 10 year exercise periods had a liquidity event yet? I'm genuinely interested to see how true to the idea they were, or whether they (eg) issued a bunch of new stock to current employees that diluted vested ex-employees.

[doh]

Some companies allow their employees to sell a portion of vested stocks whenever they're doing a new round. SpaceX is one of the top examples I know of. This is how they retain the top talent.

[tpaschalis]

What is the general view on this? I don't have an economics background, but.. Well, the 'startup scene' isn't necessarily mature and/or tested enough for employees to be able to take a 10 year risk. In a sense, for a failing startup, stock options might as well be monopoly money.

[st3v3r]

It's not really a 10 year risk, as you keep the options that have vested whether or not you're still with the company. And if the startup fails, if you haven't exercised, you shouldn't be out any money.