Upand$tarting

One of the many hats that I wear when performing my start-up duties is my Recruiter Fez. I have been involved in hundreds of job offer negotiations and it never ceases to amaze me that potential candidates focus on the wrong number when it comes to stock options.

What is the wrong number? What is the right number? The wrong number is the number of options they are offering. It is a meaningless number, what you should really be focusing on (the right number) is the percentage ownership of the company your option grant gives you! Simple math tells you that you would rather have a grant of 5 shares when the company has authorized a total of 50 shares then a 10,000 share grant on 50 million authorized. You would be surprised how many candidates fail to negotiate based on this, thinking they are negotiating from strength by asking for an additional 5,000 shares on a 10,000 share grant. Sure they may get 50% more, but 50% more of what.

The second most important negotiating point when it comes to stock options is “early exercise on change of control”. Generally the company won’t give in on this unless you are either coming in as a senior executive or key employee, but it never hurts to ask. This gives you protection and the full amount of your grant in case the company is sold or has a liquidating event like an IPO before your grant is fully vested.

Get both of these items right and you will have something of real value . . . well, possibly.