Esop fables: A cautionary tale for those joining startups
Employee stock ownership plans can come with fine print that makes them more like golden handcuffs than staff perks
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WHEN Bob* joined his first start-up, he was promised a substantial amount of stock that could be worth millions in a few years. He bought into the start-up's vision and took a 40 per cent pay cut from his previous role.
A few months into the job, the company introduced a strike price 100 times the industry standard, along with a 30-day exercise window. This meant that Bob would have had to pay more than a quarter of a million dollars just to exercise his options. If he chose to leave, he would have had to cough up that sum in a month from his last day, or give up his options.
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