Empoyeer Kept Stock Options

[Robert Jenkins]

What is the name of your state? Mississippi

I worked for a company with less then 50 employees for 1 year and 3 months in the Information Technology department as the entire department. I asked for help for more then a year and finally, while on a weeks vacation for medical reasons, the company hired an assistant. I had no input and was not involved in any way in the hiring process. Once hired, I was told to train my new assistant till he could maintain the network and associated applications. After three weeks of training, they "let me go" due to down sizing. I was 1/3 vested in 100,000 shares of stock in this private company. Upon termination they offered no compensation for my 1/3 vested stocks which were part of my initial offer letter. I feel the stock was earned much like vacation and they should not be allowd to simply "keep it". What can I do, if anything?

 

[Beth3]

What does the employer's stock vesting policy state? DOES being 1/3rd vested mean that those shares have an actual cash value if the employee leaves? Chances are the shares are worthless until an employee is 100% vested but nobody here can tell you one way or the other. The answer resides entirely in whatever written documentation you have on the stock options plan.

 

[Robert Jenkins]

I removed the company name, but this is taken direct from my offer letter.


Stock Options: 100,000 Employee Stock Options to be granted upon successful completion of 6 months of successful employment with the company (Option Grant Date). The Employee Stock Options will be issued in accordance with the Employee Stock Option Plan that will contain the governing details in relation to all Executive Stock Options. however, in general your Stock Options will vest over a three (3) year period pursuant to the following vesting schedule. 1/3 of the Stock Options will vest at the end of the first year; the balance of the Stock Options will vest at the rate of 1/8 each quarter over the following two years. The Employee Stock Option strike price will be the actual stock price as set by the Board of Directors at their first quarterly Board of Directors meeting after the Option Grant Date. The current price is $0.001 per share. Please note that all Stock Options and any stock issued pursuant to the Stock Options will be restricted, subject to the terms and conditions contained in the Stock Options Agreement, Employee Stock Option Plan, and company policy.

 

[Ramoth]

The way I read that letter, Robert, you weren't vested at all in the SOP. The Options were rewarded 6 months after you were hired, and the first vesting date was 1 year after that. You would have had to work for the company 3 more months before you were vested. Sorry, but I think you're out of luck.

 

[Beth3]

Sounds likely, although if you want to know for absolutely certain, you're going to have to take your offer letter and a copy of the Employee Stock Option Plan to an attorney to know for certain.

By the way - the amount of money you're haggling over is $333. It'll cost you at least half that amount to get a legal opinion. Then after you pay taxes, that would leave you with about $84.00.

 

[Robert Jenkins]

The date of the initial grant is clear, 6 months after start date. But from there it seems vague to me. The offer letter states that 1/3 will vest after one year, but it is unclear if the one year mark is one year from Start Date or one year from Grant Date. When working at the company, it was implied the one year mark was for one year of successfull employment, but the way it reads, it is just not clear.

I asked the man who owns the company at the time I was "let go" if he would compensate me for my vested stocks and he simply said "No" and from the conversation we both thought I was 1/3 vested.

I believe I need to find additional details on the employee stock options plan. Maybe someone at the company has this information and would be willing to share it with me.

If I find the date for the 1/3 vesting to be one year from start date/hire date then I may still have a chance. If it becomes clear that the one year date for 1/3 vesting is from the Grant Option Date, then I was never vested in the first place.

I think I know what I need to do next, but it is looking grim from here.

Thank you!!

 

[Robert Jenkins]

When I left the company, they had just closed a round of investments at $2.00 per share and had set the price of the next round of investment opportunities at closer to $3.00 per share. I forget the smallest investment block, but that was the price the company was asking from private investors and getting it when I left. But it is looking grim no matter how you look at it. The more I look into this the more I realize what happened may not be right, but it does seem legal.

 

[krispenstpeter]

The date of the initial grant is clear, 6 months after start date. But from there it seems vague to me.

Then you haven't worked for a startup or been involved in stock options before.

What Ramoth said to you is correct. Vestment doesn't occur UNTIL you own the stock and that didn't occur until you worked the minimum six months.

Therefore, both Ramoth and Beth are correct. Vestment occurs 1 year from the date of ownership of the options.

And next time NEVER work for a company who allows only 1/3 vestment or a three-year rollout. The ONLY time I have ever worked for a company with stock options that I took in lieu of salary was RealNetworks and that was because I received 50,000 shares at signup with full vestment after one year.

Otherwise, I would have walked.