Monthly Archives: May 2016

Seven Year Exercise Windows

Most startup option grants come with a 90-day exercise window when an employee leaves the company (voluntarily or not). This is standard practice. Essentially the problem is that this can force employees to take a major personal financial hit to exercise their options when they leave or are fired, and perversely this is worse the more the company has grown during their time there. (Exercising options comes with a tax hit proportional to the amount the stock has increased in value since the option was granted.)

There’s an easy solution: when an employee leaves, convert their ISOs to NSOs and extend the exercise window.

Today my employer TrueAccord extended our exercise window to seven years for people with two years or more at the company. I’m proud of what this means — this is a progressive move and it shows a dedication to the employees of the company. In general I’m skeptical about equity as a carrot for startup employees (see here for an extremely skeptical view), but this is the right way to do it.

For more, see
https://github.com/holman/extended-exercise-windows
and https://zachholman.com/posts/fuck-your-90-day-exercise-window/
and point (2) in http://blog.samaltman.com/employee-equity