isn't that $200k/year in stock worthless anyways?
my heart goes to engineers, who joined a startup on bold promises to make it, but never got to IPO, M&A or even worse - were forced to execute options to later sell them at loss
Anyone thinking of making money off stock options at pre-IPO startup are taking a get a) valuations are realistic b) startup will IPO. In this current environment, both are false.
For some shares, there is a private market, and typically the company has to approve of sales. If they do, and the market has willing buyers, no problem. If the company blocks every sale, it's worthless.
Interesting. I've not heard of the term "double trigger RSUs" before. What are the tax advantage of this over regular options? Most companies have right of first refusal of secondary market sales of pre-IPO stock. If the goal was to prevent secondary market sales. What does "double trigger RSUs" provide that right of first refusal does not?
From the company’s perspective, employees with RSUs are not actually shareholders until IPO. All those SEC and state rules about having to report like a public company once you have a certain number of employees are avoided. It essentially lets companies stay private much longer.
The “double” trigger is the ipo requirement plus the usual time-vesting for stock grants
Stripe has double-trigger RSUs which won't vest until after IPO.
Do they get to keep these RSUs until after the IPO + lockup period, even though they're not employed at Stripe anymore? (Is there another name for RSUs owned by someone not employed by a company anymore? e.g. unvested shares?)
I've seen a couple of Stripe secondaries before so I assume that some set of employees are able to transact on the secondary market.
However, important disclaimer that not all companies have the same terms - and the terms can change depending on when you were hired. Startup equity isn't absurdly complicated, but it very much is situation-specific which is where the confusion usually comes from.