Biz - Consulting & stock options
dweekly 1 hour ago [–]
- All options expire. Liquidity timelines are such that expiration of some options predates a liquidity event. This is not unusual or the company trying to screw you over.
- As an advisor, you should ask for early exercise 83(b) rights on your options at time of issue and avail yourself of that right immediately. (Don’t forget to file the 83b timely with the IRS!!) You should also ask for full acceleration on change of control. I once helped a startup land some key hires and was 1/24 of the way through my advisor vesting when they were acquired and I didn’t have an acceleration clause. Really beat myself up on that one.
Overall shareholders have a lot more rights and privileges than option holders. Exercising does take capital but it starts both the long term cap gains clock (1yr) as well as QSBS (5yr) if company valuation is <1m in, if the company goes belly up you’ll get to claim Section 1244 loss against ordinary income!). Shares don’t expire - though yes of course they can get diluted or become worthless via giant reverse splits etc.