| "So if each Foursquare stock was worth $20 and is now worth $10, the strike price of $2 still allows employees to make $8 per share now." "Now" is wildly inaccurate; these are still illiquid assets, so even if this person were to exercise their options, they can't sell yet, most likely (I'd be shocked if they could turn much of a profit selling in the private markets). And I have no idea what the terms of the new investment are, but I imagine they include some sort of protections for these new investors (I'd put money on them getting their money back plus full participation in a liquidity event). They probably get preferred shares. They probably get last-in/first-out privileges. If you joined in the last two years, you're probably underwater based on strike price. Even if you're not, if the company has a liquidity event, once these latest investors get their money back, you're probably underwater by then (this new $45m coming off the top, minus any debt, you might split whatever's left -- MAYBE). If you're an employee, you're probably not going to get anywhere close to $9.6m even if the stock rebounds. That's reserved for the new CEO who turns the company around, maybe some of his top brass. |