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A comment on How Startup Options and Ownership Work. Parent comment

Re:How Startup Options and Ownership Work by zaroth on Thursday August 25, 2016 @03:51PM (#12361944)
Yeah, so Zynga did this... it's complicated and has many pitfalls. For example, their options expired after 7 years. There's also much debate around if the liquidity event can reasonably be construed as a legitimate "performance condition", and whether you have to start accounting for (and paying tax on) the otherwise vested shares once you can reasonable foresee a future liquidity event, not just after said liquidity event actually occurs.

https://www.sec.gov/Archives/edgar/data/1439404/000119312511...

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Re:How Startup Options and Ownership Work by sokoloff on Thursday August 25, 2016 @05:02PM (#12362476)
It doesn't have to be solely a performance condition.

I don't think it would be hard to prevail on the facts arguing that a requirement for an IPO (or similar liquidity event) is wholly out of the employee's control and that a substantial risk of that not happening occurs up until the moment that it actually happens. IPOs fall apart/are withdrawn and mergers fail frequently enough that a substantial risk argument could probably be sustained.

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