[imroot]

I worked for CollabNet from 2005-2010.

When I left, I bought my stock options.

I got a friendly letter in the mail a few years later telling me that the company had been restructured, and that my shares are now worthless.

If I'm getting shares as a part of equity, then I'll consider that as part of my comp package...however, if they're stock options, I generally completely disregard them: I haven't yet met a startup to change my mind.

[kingnothing]

Can anyone chime in as to how it is legal to remove someone's ownership from a company like that?

[Blackstone4]

Bankruptcy .... when people use the word 'restructuring' it typically refers to some sort of change in the capital structure/ownership where by equity and maybe even some of the debt is either wiped out, worthless.

When accepting venture funding, the VC capital will come in as preffered equity which is similar in some ways to permanent debt with no interest payments.

[_puk]

From experience..

Old company is renamed something like "legacyabc"

A new company is formed with the old company's name. All personnel and IP is moved to the new company", all debt is left in the old company. Original share holders get a big payout.

The old company is now worthless. Shares are now worth less than the original strike price. Original company is likely dissolved.

Bad luck.

Generally you'll have to sign a new contract in the new company to keep working.

If you're really unlucky, your L1 (or w/e) visa is tied to the old company, you now have to leave the country, and can't easily transfer to this new company.

[pbrb]

It happened to me as an employee - during an acquisition we were force liquidated at a price that was just above strike. A few people made some money, but most people made a couple thousand dollars. A couple years later we all got checks in the mail for reimbursement on overage from tax withholding.

[harryh]

If CollabNet had given you stock instead of options as part of your comp package they would have ended up just as worthless as your (exercised) options.

It's a bit weird that you would take wildly different views on the value of one vs the other.

[strken]

Would you rather have something worthless at no cost, or buy something worthless because you couldn't estimate the cost and then lose all your money?

[harryh]

Stock grants aren't costless. You have to pay taxes on them (at either the time of grant or time of vest).

[kasey_junk]

Most are setup to have dual triggers so they only vest when they are worth something. Which means the grantee has a lot less cash exposure.

[harryh]

Oh interesting. I've never actually seen a setup like that.

I will now consider negotiating for something like that if I ever again join a startup. Thx!

[kasey_junk]

Double trigger RSU vesting is the ‘standard’ now. It’s so much better for employees that I now see the use of options as a big red flag.