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4 years w/ one year cliff. Options, not stock.



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


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.


It's more for tax purposes. You actually don't own the stock yet so you're not paying taxes on it.




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