5 ms·

Is "options, not stock" mainly to get around the 500 shareholder rule? How is the strike price of the options typically determined?

• gthank 16y ago
  It's also typically a huge win for the employees: at a pre-IPO company, your stock isn't really worth very much, because it's hard to find somebody to buy it (for most employees). So instead of paying taxes for a highly illiquid asset, you instead get an option (probably with a really nice strike price), and you don't pay taxes until you exercise it.
• stefanobernardi 16y ago
  It's more for tax purposes. You actually don't own the stock yet so you're not paying taxes on it.