Ask HN: Is it common/legal for stock options to never vest?

https://news.ycombinator.com/item?id=11865294

by glennrivers1 • 10 years ago

4 10 10 years ago

news.ycombinator.com

I've worked at a startup based in Manchester, UK for 6 years. The company has grown significantly and could be worth > £50m today if acquired.

Upon reviewing my share options amounting to ~2.5% of the company, I was surprised to learn that there is no vesting schedule. This means that if I leave, I lose all options.

I've never known a share option agreement to work like this. Is this ethical? Can I exercise early to work around this?

calcsam2• 10 years ago

You need to talk to a lawyer about this pronto.

No, this is not ethical, nor common.

Legal? Dunno. And that is the question.

twunde• 10 years ago

Make sure to find a lawyer specializing in startups.It's probably best to get the most up to date equity documents the company has as well as the documents you originally signed.

glennrivers12• 10 years ago

How would I go about finding a lawyer with startup experience to help me as an individual? Should I expect to pay large amounts of cash for this?

brudgers3• 10 years ago

[IANAL]

In the absence of a vesting schedule, I see little legal reason that the options did not vest immediately. The primary reason for a vesting schedule is to prevent immediate vesting of options from occurring.

Lack of a vesting schedule is, in my experience, pretty common among less sophisticated [for some definitions of "sophisticated"] founders. It sounds like this a case where it worked out as well without one since you stayed past a typical vesting period.

That said, exercising and liquidating the options is likely something that should be reviewed by an attorney irrespective of vesting schedules or an immanent intent to leave the company.

Good luck.

glennrivers12• 10 years ago

Thank you for your advice. It seems it'll be worth seeking legal advice on this.

brudgers3• 10 years ago

There's possibly enough money involved to warrant provisionally planning to speak with an accountant based on discussions with the attorney.

BjoernKW• 10 years ago

You should talk to a solicitor about this as soon as possible.

You shouldn't immediately assume unethical conduct or foul play, though. Vesting schedules are still somewhat specific to US startup culture.

Is this a private (Ltd) or public (PLC) limited company? If the former you most likely own those shares right away (but in any case you should definitely have a solicitor review your contracts).

throwawayoldmed• 10 years ago

I have "phantom" stock options that "vest" (such that they are actually worth something in the event of an acquisition) but both vested and unvested shares are forfeited if I leave the company under any circumstances. So there's one bit of anecdata for you. These were granted initially to a small handful of us near the beginning of the company and since, about a third of the original group have left, forfeiting their shares.

You get what you negotiate, I guess.

Ask HN: Is it common/legal for stock options to never vest?

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