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Ask HN: only 90 days to exercise options. how do I change this policy?

3 points by throwaway12917 ↗ HN
Recently I learned that it is an industry standard to give employees 90 days to exercise their stock options after they quit or are fired (0 days if fired with cause). This whole time I was under the impression the expiration date was the latest one could exercise. I am stunned that all the sweat and hard work can go unrewarded.

For now I am happy working at company X but who knows what will happen in a couple years. I don't want to be in a position where I'm forced to decide between staying at company X or losing my stock options - the golden handcuffs.

There are companies like Pinterest, Instacart, Kickstarter and others [1] that are redefining the industry standard by extending the exercise windows. Sam also posted his thoughts on treating employees better. [2]

I intend to approach the founder to restructure the employee stock options while the company is still small.

Other than extending the exercise window to 10 years, what else should I be asking for? And what are the pitfalls?

[1] https://github.com/holman/extended-exercise-windows [2] http://blog.samaltman.com/employee-equity

5 comments

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dudul
What are your arguments for changing this policy? How are you gonna convince the founder to change for something that is worse for him? Your founder has literally zero incentive to revise this policy other than "it's better for the employees".

Do you have troubles attracting/retaining talent? Because if it's not the case I don't see what you're gonna tell him/her.

throwaway12917
Good point and if this were a bigger company I would agree with you. However, we are still a very small company (single digits) going through a critical period.

As one of the key employees I have leverage. Am I irreplaceable? No, but it would definitely be a setback. One that the founder cannot afford at this time.

I can't speak for the other employees but I imagine they won't be happy either once they learn how the founder treats employees.

Besides appeasing existing employees there is the added benefit of attracting and retaining talent going forward. This is a great point that you mentioned and shouldn't be overlooked especially considering how competitive the valley is for talent.

dudul
Good luck then :)

Not to be pessimistic, but don't overestimate your leverage. You may know that you leaving would be a big setback, but the founder may not. Careful with the ultimatum approach too. Even if the founder gives in, it may create resentment if your conversation ends up being "if you don't do this, I'll leave, and everybody else will follow!"

It's interesting that you think that a very small company is more likely to implement this new policy. I would have said that a bigger, more stable company would be a better candidate. Founders at small companies are betting everything on their shares, they will be more reluctant to giving them away too easily.

throwaway12917
Thanks for the feedback dudul, it helps when someone shares the other perspective.

Agreed, I don't want the conversation to steer into an ultimatum nor using that line of reasoning. That will leave a sour taste in everyone's mouth.

I think the conversation can be approached in a more positive light and framed as ensuring all the hard work and long hours put in by me and other employees is fairly compensated and we get to retain the equity that vested.

eskil
One suggestion you can make to the founders is early exercise. Some companies offer this. That at least gives the employer the benefit that people put money on the table and "invest" in the company by buying their options before they vest. It shows some belief and financial commitment.

Of course, in a very early startup, that investment might be so small they won't care, and there's a tax implication for the employee you'll want to be aware of.