Employee stock options

[KingGheedora]

If working for a privately held company that grants you options, is it true that they are worth nothing until the company goes public, or is acquired?

 

[syee]

Options is basically an option to buy shares of the company at a pre-defined price. If it's not publicly traded, I can't see how they can offer to sell you any shares when there are none. I'm guessing like you said - they may be going public soon...

 

[DaveSimmons]

I'm not a lawyer but:

Privately-held companies have shares, they just aren't publically traded.

Estimates on the share value are made by accountants for private companies all the time. If there is a difference between the option price and current estimated value then that difference is (roughly) the value of your options.

You can sometimes sell the options back to the company once they are vested, especially if you are leaving the company, but there is no law (that I know of) saying they have to.

Option and share grants do often say the company has the first shot at buying them, but I assume they have to at least match any other credible offers.

 

[tranceport]

Get as many as you can. I love me some options!

 

[Zombie]

Yes, I know it from first hand experience. I was granted 15000 options at .20 each. They weren't worth the paper they were written on till somebody came along and bought out out. I made almost 15k at buyout.