Re:How to evaluate ESOP offer at salary negotiation?
by nelsonenzo on Monday March 15, 2021 @05:57PM
(#26469730)
You are right, thank you for correcting me.
So to add for others:
> stock option strike price is usually equal to the FMV of the company’s stock on the day the option is granted.
ergo, if the strike price when the options are granted is $1, they are worth $1, and your cost to exercise is to purchase them at $1.
Ergo, as stefanDM points out, they have no additional value to your salary on day 1. They only have value if
1) They increase in value AND
2) They become tradeable on either a public or private exchange / are purchased by another company.
So to add for others: > stock option strike price is usually equal to the FMV of the company’s stock on the day the option is granted. ergo, if the strike price when the options are granted is $1, they are worth $1, and your cost to exercise is to purchase them at $1.
Ergo, as stefanDM points out, they have no additional value to your salary on day 1. They only have value if 1) They increase in value AND 2) They become tradeable on either a public or private exchange / are purchased by another company.
I found this article to be useful: https://carta.com/blog/equity-101-stock-economics/#:~:text=F....