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Re:Equity Investment Simulation: Illustrating Dilution by mnutt on Monday November 21, 2011 @12:08PM (#3261809)
One thing I've always been curious about: Why not just have a large option pool, with the condition that in a liquidity event all unused equity in the option pool goes back to the common stockholders?
Re:Equity Investment Simulation: Illustrating Dilution by notbitter on Monday November 21, 2011 @12:55PM (#3262011)
Because the common stockholders don't have a seat at the table. Instead, when the company decides to sell, the execs fully dilute the common by granting themselves the remainder of the pool (with acceleration on change of control, of course).