Stock Option Counsel - Repurchase Rights for Vested Shares - "Horrible for Employees"

Still loading...

	B	C	D	E	F	G	H	I	J	K	L	M
2
3	Stock Option Counsel - Legal Services for Individuals
4	Gold Standard of Startup Equity
5
6	Standard 1: Ownership
7	Can the Company Take Back My Vested Shares?
8
9	Example 1: No Repurchase Rights for Vested Shares - Employee's Owns $1.7 Million of Equity at IPO
10
11		Event	Company's Fully Diluted Capital (Shares)	VC Price/Share*	Company Valuation	Employee's Shares	% Ownership	Common Stock "Fair Market Value" (Estimate)**	VC Valuation of Employee's Shares	FMV Repurchase Right Price	Employee's IPO Value
12	Aug-04	Series A Financing	11,359,833	$0.23	$2,574,933			$0.08
13	Aug-04	Employee Granted Stock Options with Four Year Vesting & Early Exercises Stock Options
14	Feb-05	Series B Financing	19,441,981	$0.49	$9,526,571	113,598	0.58%	$0.16	$55,663	$18,554
15	Nov-05	Series C Financing	33,678,120	$1.15	$38,729,838	113,598	0.34%	$0.38	$130,638	$43,546
16	Nov-06	Series D Financing	52,479,120	$1.46	$76,619,516	113,598	0.22%	$0.49	$165,853	$55,284
17	Oct-07	Series E Financing	59,056,943	$1.82	$107,483,637	113,598	0.19%	$0.61	$206,748	$68,916
18	Aug-08	Employee Owns Vested Shares, Is Terminated by Company; Company Does Not Have Repurchase Rights for Vested Shares, So Employee Keeps Shares
19	Sep-09	Series F Financing	70,293,823	$1.98	$139,181,770	113,598	0.16%	$0.66	$224,924	$74,975
20	Feb-12	Series G Financing	83,732,245	$5.45	$455,989,059	113,598	0.14%	$1.82	$618,632	$206,211
21	Nov-12	Initial Public Offering	98,532,074	$15.00	$1,477,981,108	113,598	0.12%	$15.00	$15	N/A
22	Nov-12	Initial Public Offering - Employee Still Holds Shares So Owns Publicly Tradable Shares Worth IPO Price of $15/Share									$1,703,970
23
24	* At the time of an IPO, the VC Preferred Stock traditionally becomes Common Stock, so there is no longer a difference in price between VC price per share and Common Stock Fair Market Value
25	** Until the time of an IPO, the VC price paid for Preferred Stock is higher than the FMV of Common Stock. The FMV is set at a deflated price per share based on an outside valuation firm;
26	This is designed to allow employees to buy cheap stock without running afoul of the IRS, but it is not the true "value" of Common Stock
27
28
29	Example 2: Repurchase Rights for Vested Shares - Employee's Forced to Sell at $68,916 at Termination, Owns $0 at IPO
30
31			Company's Fully Diluted Capital (Shares)	VC Price/Share*	Company Valuation	Employee's Shares	% Ownership	Common Stock "Fair Market Value" (Estimate)**	VC Valuation of Employee's Shares	FMV Repurchase Right Price	Employee's Payout	Employees's Lost Value Because of Repurchase
32	Aug-04	Series A Financing	11,359,833	$0.23	$2,574,933			$0.08
33	Aug-04	Employee Granted Stock Options with Four Year Vesting & Early Exercises Stock Options				113,598	1.00%	$0.08	$25,749	$8,583
34	Feb-05	Series B Financing	19,441,981	$0.49	$9,526,571	113,598	0.58%	$0.16	$55,663	$18,554
35	Nov-05	Series C Financing	33,678,120	$1.15	$38,729,838	113,598	0.34%	$0.38	$130,638	$43,546
36	Nov-06	Series D Financing	52,479,120	$1.46	$76,619,516	113,598	0.22%	$0.49	$165,853	$55,284
37	Oct-07	Series E Financing	59,056,943	$1.82	$107,483,637	113,598	0.19%	$0.61	$206,748	$68,916
38	Aug-08	Employee Owns Vested Shares, Is Terminated by Company; Company Exercises Repurchase Right and Forces Employee to Sell Back Shares at Fair Market Value of Common Stock									$68,916
39	Sep-09	Series F Financing	70,293,823	$1.98	$139,181,770	113,598	0.16%	$0.66	$224,924	$74,975
40	Feb-12	Series G Financing	83,732,245	$5.45	$455,989,059	113,598	0.14%	$1.82	$618,632	$206,211
41	Nov-12	Initial Public Offering	98,532,074	$15.00	$1,477,981,108	0	0.00%	$15.00	$0	N/A	$0
42	Nov-12	Initial Public Offering - Company Had Repurchased Shares at FMV of Common Stock at Termination of Employment, So Employee Owns $0 in Equity at IPO										$1,635,054
43
44	* At the time of an IPO, the VC Preferred Stock traditionally becomes Common Stock, so there is no longer a difference in price between VC price per share and Common Stock Fair Market Value
45	** Until the time of an IPO, the VC price paid for Preferred Stock is higher than the FMV of Common Stock. The FMV is set at a deflated price per share based on an outside valuation firm;
46	This is designed to allow employees to buy cheap stock without running afoul of the IRS, but it is not the true "value" of Common Stock
47
48
49
50	Stock Option Counsel - Legal Services for Individuals