I chatted with one of my good friends, Mckenzie, about equity compensation. She is a super successful sales executive but her most important job is being a Mom to little Liam and Renne. She’s more than busy! She has two young kids, and she runs the household. Not to mention she has a full time job and three different side hustles! – a long term rental property, a short term rental property, and construction is underway for a new rental property.
Understand Job Offers at Startups, Especially the Equity
Not that long ago, she was evaluating an offer at a startup business. We chatted about meaningful equity offers (stock options, RSUs, etc.) at startups, and what they look like. This depends on the company’s funding, industry, and the prospects for the business. She reminded me of a story about negotiating a job offer at a startup where I helped her tremendously.
A recruiter was placing her in a sales role and in the beginning of the conversations, he proposed equity compensation as part of the offer in the form of stock options. Towards the end of the recruiting process, when she was close to receiving the offer, the stock options had vanished, and he told her that,
“You are not going to receive stock options, because most stock options are worthless. You can hang them in a picture frame in your bathroom.”
I insisted that she get the equity as part of the offer, and eventually she did. Those “worthless” stock options for the picture frame were worth over $200,000 when the company was acquired soon thereafter!
Make the Most out of Stock Options and Equity Ownership
The acquiring company was a publicly traded firm, and at the time there were additional pieces of equity compensation offered that we worked through together. For instance, I helped her understand the ESPP, RSUs, and a tax planning strategy for stock options that helped her weigh the tradeoffs between the capital gains taxes and investment risk in the stock.
Thanks to her talent, hard work, and a little bit of straightforward advice, Mckenzie is well on her way to following her passion and dream of owning real estate properties. Her goals are to escape the daily grind, spend time with her family, and not read through convoluted equity compensation documents.
What do You Want?
Whatever it is you want – the freedom to work as you wish, accumulate wealth, or spend quality time with your family, I will work with you to help guide you through decisions to make you feel competent and smart about your equity compensation situation.
If you’d like to save your precious time and spend it as you like, reach out and schedule a free consultation or send me an email.