I own 10% of the company I helped co-found. After a round of funding last year, I was given and signed an options letter to adjust my number of options to maintain my 10% equity. However, unbeknownst to me or our CEO, the number of options in the letter was ~100 more than what accounted for to maintain the 10%. These options have a strike price of $0.25.
Our accounting team set up our options in Carta and I noticed there was a different number vs my signed options letter.
We've just gone through another round of funding and so new options are being granted but the new strike price is set at $0.7. After I raised this problem with the CEO, they have suggested 2 different ways to fix this:
They own the screw up since the letter is the legal agreement that I'm owed the ~100 options at $0.25. They will have to get board approval for this and they seem a little reluctant about this. If they do this, I'll get less options at $0.7 in the current round to make sure it stays at 10%. I'm also a little worried that they'll hold this dumb mistake against me since they were really trying to downplay this.
They re-issue the letter with the fixed number and strike price of $0.25. I get the ~100 options at the current round's strike price of $0.7.
Doing the math, it's only about $45 difference in strike price:
- Old: ~100 * 0.25 = $25
- New: ~100 * 0.7 = $70
- Difference: $45
Obviously, I was only ever supposed to own 10% equity, so in principal I'm OK with option #2. Is there a reason I shouldn't go with option #2 to make my CEO's life a little easier? Or, there something major that I'm missing about this situation?