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Consider (diplomatically!) talking to your boss.

If the company is successful-but-not-spectacularly-successful for a long time, one way to handle such issues is by structuring the flow of money from the company to the founders as dividends - that way, you'll get paid some fraction of what they get paid, indefinitely. Note that there are other ways to structure that particular money flow, though, and there's very little you can do to influence the choice.

For a select few companies, secondary markets exist that trade in illiquid stock. I understand that many equity agreements forbid selling on those markets and/or quickly selling on those markets. However, this only works if the buyers have a reason to believe that the stock will ever be worth anything at all.

You mention valuations, which suggest that some fairly savvy people have decided to exchange money for shares in this company. Do you know how the investors expected to get paid back? It's possible for founders to screw investors, of course, but this may be another thing worth looking into.

This is a general big problem, especially with the moribund post-SarBox IPO environment. Before those days, my father made more than a little money arranging cash-outs for founders of such companies, and there's absolutely no assurance you'll ever see a cash out.

But this strikes me as a problem your company ought to care about, especially if your options were part of a compensation package with below market salary, so maybe bring it up with the relevant people? It does them little good to get people like you upset, take a reputational hit, etc.

You own more than 5% of the company? With that stake you should be on the board if you exercised the options. There's only 20 5% owners in any company.

Are you invited to board meetings? If not, considering yourself a "potential owner" when you're not invited to the meetings where owners decide things means you are very confused about things. There's a reason why when a company goes public, the quarterly minutes at board meetings become public as well, because you aren't really an owner if you're excluded from even learning about the biggest of decisions.

What you should do depends heavily on whether you have common or preferred shares. If you have the options to buy common shares, which you probably do, they're worthless so don't even bother exercising them, the people who are invited to the board meetings have all sorts of routes they can take so that your options will become meaningless, so to spend the money to exercise and pay the capital gains on them is madness.

My advice is to recognize that you have a sunk cost (look up sunk cost fallacy) and jump ship. Keep applying to companies like Google, Facebook, Amazon, Microsoft, and other larger companies until one makes you an offer, and those companies will give you real compensation packages and stock plans that you will be able to easily turn into American dollars in a year.

> considering yourself a "potential owner" when you're not invited to the meetings where owners decide things means you are very confused about things

Well gosh, I don't think there's any need to get nasty about it. I may be naive but give me a break. When I refer to ownership I'm obviously simply referring to being a shareholder. No, I am not invited to board meetings, but as far as I know, neither is anybody else who's not exec staff. Is this unusual?

The options are on common shares. Can you elaborate on schemes in which common shares are made to become worthless? I have been explicitly told that there are no liquidation preference multipliers on the preferred shares, and the valuation is well above where that would matter. So what sorts of shenanigans would make my shares worth less? Please be specific if you don't mind. It may be a dumb question, but just telling me I'm dumb isn't really getting the point across.

Regarding going to {GOOG,FB,AMZN,MSFT}, I've actually already been through a couple of those and experienced the "real compensation packages and stock plans" and got a couple pretty respectable windfalls out of them, but I've decided the tradeoffs aren't worth it. Job satisfaction absolutely can't be beat where I am, and that's worth a lot to me. That doesn't mean I don't wonder what my n% is actually worth and how specifically that works.

If it's a profitable company that you've been at almost 10 years, that you want to stay at, can't you ask them for a raise, and ask them for help with the stock option problem? They probably would want to work with you if you've been there that long.

Raises have of course been requested and granted. My salary isn't really what's at stake here and any raise I could ask for is dwarfed by the potential value of shares sitting on the table that I simply don't know how to get money out of. What are you imagining I'd ask for when you say "help with the stock option problem?" Ask them to buy me out?

Well for example, a very low interest loan secured by the stock from the company to help you buy it out / deal with AMT tax credits being distributed over the years. Or a bonus to help you buy out your long vested stock and the AMT tax difference you will have, etc.

With the bonus, the stock shenanigans that they can perform will be relatively minor as far as additional expenses would go. If they IPO 4 years later and you get a windfall, good. If they liquidate and you get nothing, oh well.

You could also sell the shares to interested people on something like Equidate. Then you don't have to cash in your options until you have an interested buyer. If you get right of first refusal issues, then the company would be buying out your stock directly in that case.

I've never used something like Equidate, so your milage will definitely vary.

>>> If you have the options to buy common shares, which you probably do, they're worthless so don't even bother exercising them.

I was in the exact same position as the OP, with expiring options on common shares in a company with no immediate plans to IPO. I (fortunately) didn't take your advice, exercised the options and 3 years later, when we were acquired, I was $500k richer. Of course, everyone's situation is different but I wouldn't take such an absolute position.

Why do you think the common shares are worthless, if the company is worth 10x (to use the conservative number) the amount invested in it?

I think my inclination would be to exercise the options, because if I didn't, and they turned out to be worth something, I would just want to shoot myself. But this isn't necessarily a rational argument :-)

I think they're worthless because of the nature of liquidation preference. There are a select few elite startups like Dropbox that I would value common options at, but those companies will obviously IPO. Clearly the person who I responded to is at a company that is not going to IPO, exercising options is extremely expensive, and there are well known avenues to making common shares worth $0 and so it's an enormous financial risk. Again, if you're not invited to board meetings, how much do they value you, and how much do they consider you a co-owner and partner? If they don't, and you're in the dark about so much critical information, taking that financial risk is even more of a bad play.

Late-stage rounds that offer employee buyouts are somewhat typical lately.

Also, if you exercise and leave, some places like SecondMarket, Equidate, MicroVentures and a few others provide a chance to offload some of that equity.

In regards to salary, your company should be approaching a maturity point where salaries are defined in bands, by HR (by someone titled "Compensation Analyst" or similarly), not decided on a case-by-case basis.