Yes, I've ready many horror stories. The combination of "at-will" and "you lose everything if you're fired" just reeks of danger, to be honest...
I've been dangling on the edge of leaving for some time now, the options were literally the only thing keeping me there -- the hope that if I stayed for 2-3 months longer, perhaps we'll get a surprise early exit. But it seems that given how much the valuation has changed now there's some more experienced people involved, even in the case of that early exit (which is very unlikely, I know), it isn't really going to do anything for me...
> Included from deleted post above, for the history books:
> Thanks for that. I've always been skeptical, and me (or any other employees) actually believed the company should be valued at $30m when it was. Another thing I found that was; my options aren't vested. They're exercisable immediately, but are restricted in the sense that the moment I leave the company (for any reason), I lose them. From what I've heard, it's much more common for a ~4 year vesting period, at which point they're essentially 'yours', whether you stay or not. Is that unusual? From every angle, it kind of feels like we're being given a bum deal here (I won't go into salaries, demotivating work environment, 2 years of 60+ hour weeks ... )
Options are not shares. They are a contract that allows you to buy shares. When options vest over time, you become eligible to buy actual shares. In your case it seems that the options do have actually vested: but you still need to pay $150k out of pocket to own real shares in the company.
This is not an issue when the company gets acquired, because you can buy the shares and then sell them on immediately, pocketing the difference.
In summary this means that your choices are:
1. Stay employed with the company until it gets acquired or goes public. If the final valuation is over $30m, you can at best earn (X-$30m)*0.005. For example, at a $40m sale, you could make up to $50k (minus taxes, or the investors' preferred share payouts). If the company is sold for less than $30m, the options are worthless.
2. Leave now, and just before that spend $150k of cash to exercise the options, buying shares. The profit calculation is still the same, but in addition you have to risk actual cash.
3. Leave now, and don't exercise the options.
The second choice is extremely risky, especially when you don't have $150k to blow on investments, or when you don't believe that the company's value has increased far above $30m.
Options not vested seems to me to be a red flag. That's a sign that you want another job, there are just too many ways that can go wrong. Such as, "Shortly before payout, the CEO fires everyone he doesn't like." And given that you weren't given the second round at the first opportunity, do you think you'll be on that list? Or, alternately, "We can't make the sale unless we reduce options, we're firing anyone who doesn't voluntarily give up half their options."
Let me give a real story. I know someone who worked for a small company that was bought by AOL. Part of the purchase was a large options grant with a 1 year cliff. They worked hard for that year. 1 week before the cliff, AOL fired everyone, including the former CEO.
Turns out that AOL had planned the episode from the beginning as a way to spend less but let the company think that they were getting paid more. Any time you get something that is entirely dependent upon another's good will, it is only worth as much as that other's good will when the time comes to pay out. Is that a position you want to be in?