Chapter 2 Employee Stock Options
A User’s Guide
Suppose you have two job offers—one with employee stock options (ESOs) and the other without. The offer without ESOs has a flat $80,000 base salary, and the other is for $40,000 in base pay plus $40,000 in ESOs. By market value, they are both the same. Sure, the ESO alternative could make you very wealthy if the company’s share price rises, but you could also end up with only your $40,000 base salary if the share price falls, remains constant, or does not rise quite enough. Which would you choose? How would you go about making your decision? Does it make a difference if your employer is a well-established company or start-up? How might your age and family situation play a role? Why is it likely ...
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