Startup Equity: 409A vs Investor Value (part 2 of an n part series)

untitledfWe have all seen the headlines, “XYZ receives $100M in funding at a $3B valuation.” We seldom see the “other” valuation showing the same company is worth $350M. For publicly-traded companies, value is determined by investors working as a group in a real-time market. They are generally purchasing the same kind of stock. Values are based on a combination of publicly disclosed information, supercool computer models and gut feel. But in the world of the pre-IPO start-ups, values take on a life of their own.

Investors in startups are buying stock with more risk and more upside potential. Companies only sell stock to investors on Continue reading

Employee Stock Options on the Precipice?

6a0134836082f8970c01bb08b4abc0970d-200wiI am declaring February “Stock Option Month” at the Café (at least in relation to my posts). For more than 20 years I have been directly involved in the ebb and flow of employee stock options. When they are great, they are the best. When they are not great, they can be truly destructive. I will call it right now. We are, once again, on the precipice of the downfall of stock options. Consider the headlines below. Continue reading

ICYMI – Executive Pay Updates Mid-2015

untitled sThis post is a roundup of recent and impending activity in the world of executive compensation.

Normally, this is the time of the year where we see the hand wringing and tearing of clothes that have come as a result of annual Say On Pay voting. But, let’s be honest, each year only 2% of companies fail and about 7 out of 10 companies receive support from at least 90% of their shareholders. Until something changes, Say On Pay is mostly interesting to the few companies who fail or are at the margins. Most of you probably breezed through (again.)

However, the last month or two have been a whirlwind of activity for executive compensation professionals. Continue reading