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  • #2080689

    Stock Options Strike Price


    by aitavaras ·

    I have been offered a great position with a salary of $88,500. The offer includes 12,000 stock options with a strike price of $2 a share. The company is planning their IPO for the end of the year.

    I know the value of a company is relative, but should I have not been “given” 12,000 shares of stock? Or is this the norm to have to purchase the stocks at a certain strike price? What has been everyone else’s experience?

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    • #3893191

      Stock Options Strike Price

      by csanosi ·

      In reply to Stock Options Strike Price

      This is fairly typical. It is also a very good benefit. Here’s how it works. You get the option to buy shares (12,000) in this case for a price ($2) for a limited amount of time. Regardless of the price of the stocks when you decide to buy (exercise the option) you only pay $2. This can be very beneficial especially if you can exercise the option after the company goes public because, if the stock rises to say $5, you are still only paying $2 for the shares. Good Luck

    • #3893114

      Stock Options Strike Price

      by al hedstrom ·

      In reply to Stock Options Strike Price

      Seriously consider the above answer. You may want to address your initial question in the form of a negotiation tool for employment. Maybe a little give-an-take wherein they give you stock if you take a lower pay scale. This _MIGHT_ be beneficialin the long term regarding tax liabilities of both your salary as well as capital gain of the stock that you eventually sell. Also mix this question into your negotiations regarding other benefits and perks (moving costs, medical/dental, company car, etc.).

      Good luck.

      Al Hedstrom

    • #3894200

      Stock Options Strike Price

      by pat estes ·

      In reply to Stock Options Strike Price

      Read some of the recent articles on stock options. They have been excellent.

      Quick recap (and I hope not a copyright violation) : Don’t count on options as a replacement to salary. They are a big “Maybe”, as in maybe worth nothing if things gowrong.

      Also check for a thing called “vesting”. This means you have to work for a certain amount of time for these options to “vest”. If the vesting period is 4 years, and you leave early, you lose these options.

      Recent market down swings have left many people with stock options that are worth nothing.

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