Imagine this scenario: you’ve received an offer for a job you’re very interested in, but stock options figure heavily into the compensation package. How do you place a value on stock options? What if the company is a start-up? Should you negotiate for more stock options, or try to have the rest of the package altered?
If you’re not sure how to answer these questions, we highly recommend giving What are stock options worth in a job offer? by Nick Corcodilos (of Ask The Headhunter) a read. Here’s a recap of some of the useful advice he offers when considering a job offer (especially for a start-up) that includes stock options:
- Understand that stock, particularly start-up stock, is a crapshoot. Think of these stock options as a bonus lottery ticket rather than a key component of your compensation: it may be a big winner someday, but it may amount to nothing instead.
- Realize that start-up stock options are virtually useless right out of the gate: since you can’t sell them, you can’t place a monetary value on them.
- Only accept the offer if both the work itself and the rest of the compensation package (without taking the stock options into consideration) would be enough to get you to take the job.
- Don’t forget to negotiate. Try for all the stock options you can get on the off chance they will be worth something in the future, but don’t forget about the other aspects of the compensation package such as salary, bonuses, commissions, etc.
- Get everything in writing, and have it reviewed by a lawyer.
- Assess your risk tolerance by asking yourself if you would buy into a start-up without working there. If you wouldn’t buy the stock otherwise, why would you want to accept it as a major part of your compensation package?
Don’t forget to check out Nick’s full post for more details!