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I signed with a company which at that time was private, and I got stock options as part of my comp, which vest over the next four years. In the time between my signing and my starting date, the company went public. A few months after I started, the strike price for my options was set at the current market value of company shares. The stock is now fluctuating around this value, which makes the equity part of my comp close to worthless.

Meanwhile I found out that new employees are now being granted RSUs instead of options, while the employees who have been with the company longer than me had very low strike price and obviously profited greatly from the IPO.

I realize that my situation is just due to bad luck/bad timing and that no one in particular is to blame. But I still think it's very unfair that e.g. my coworker who started on the same day as me is getting RSUs, just because he signed the contract a few weeks later than I did - after the company went public and started granting RSUs to new employees instead of options. Would it make sense for me to bring this up with my manager and ask to be made up the difference / compensated additionally? Thoughts?

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  • Do your options expire soon? It sounds like they are "at the money," which probably means they are probably not entirely worthless. The valuation of options is complicated; have you considered consulting with a stockbroker or investment advisor regarding their worthlessness?
    – trognanders
    May 16, 2019 at 1:33
  • @trognanders They don't expire soon, in fact they haven't even vested yet (they vest over the next 4 years). I realize that by that time they might be worth more (they also might not be), but that does not erase the disadvantage I am in compared to my coworkers.
    – whatabummer
    May 16, 2019 at 2:02
  • Why are they worthless? Did you have to pay for them from your salary or something?
    – nick012000
    May 16, 2019 at 2:57
  • @whatabummer: The fact that the options will vest is important, that should probably have been in the question. I added it for you.
    – sleske
    May 16, 2019 at 8:39
  • "Would it make sense for me to bring this up with my manager and ask to be made up the difference / compensated additionally? Thoughts?' - No; Your manager cannot do anything about the situation. You might be able to see if you can convert your stock options into RSUs. Your stock options are also not worthless.
    – Donald
    May 17, 2019 at 19:32

2 Answers 2

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The options are not worthless

The options are not even close to being vested yet, much less expiring. You mention that the stock trades at roughly the strike price, which means they are "at the money." If the stock price goes up, you will make money. The options are a real liability for your company and genuine equity sharing for you.

The RSUs might not be more valuable

Are you sure that the RSU package covers as many shares as your options?

Since RSUs oblige the company to give shares, they may not issue as many of them as options. If you get more options than RSUs, there is more "leverage" on profits if the stock increases in value, at the cost of no payout of the stock decreases.

Options might seem less valuable because you theoretically have to exercise the options and buy the stock to realize profits, but many employers are willing to just payout the difference between the strike and market values times shares.

Can you trade?

Since both packages have value, you certainly might be able to negotiate a trade. Ask nicely. If the RSU package has the same number of RSUs as you have options, it might be more complicated since you are asking for a bigger bonus. Choose your battles wisely.

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  • "many employers are willing to just payout the difference between the strike and market values times shares." With a public company, you should be able to sell the shares on the market, regardless of whether the company is willing to pay the difference.
    – Acccumulation
    May 16, 2019 at 16:13
  • @Acccumulation That is true, but the downside is that you have to front the money to buy shares at the strike price which might be a considerable sum. Employee options are not the same as exchange-traded options which can be sold directly for at least their hypothetical value if executed.
    – trognanders
    May 16, 2019 at 21:14
  • You can't sell employee options on the market?
    – Acccumulation
    May 16, 2019 at 21:33
  • @Acccumulation They are called employee stock options (ESO) and have rules and durations that are not compatible with the options exchange. They are often non-transferable which would preclude any sale. en.wikipedia.org/wiki/Employee_stock_option
    – trognanders
    May 16, 2019 at 21:43
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    If the RSU package has the same number of shares as options, then the OP has a substantially different compensation package, since an RSU is always worth more than an option. Other places I've worked grant options and RSU at a 4:1 ratio, since RSUs are always worth something, but options can easily be worth nothing. At that conversion rate, if the stock rises more than 33%, the options are better, if not, the RSUs are better. There's still time for the options to come out on top, although right now, the RSUs would have been better. It only really matters when you decide to cash out, though.
    – Nuclear Hoagie
    Apr 13, 2020 at 19:48
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To give you the straight dope:

You have no rights.

It's a case of bad luck.

You could ask, obviously, but it is entirely at the discretion of the boss to make that decision, you literally have no real argument other than "but I really want to make more money".

Can't really put it any nicer than that.

Good luck.

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