Let us start here with this question in this article. Risk can equal great rewards and you have to take risks to reap the benefits! Nobody had great gains by sitting around doing nothing and wishing for them to happen. Action, action, action and exercising the right to purchase stock options is the key to success in this arena. Oftentimes a company will sell its employees stock options at a discounted rate off the market price, in a publicly traded company. Or even discounted rates in a privately held company to raise capital, or just to give the employees and opportunity for ownership.
Startup companies are some of the best organizations to purchase and get into a Stock incentive plan. Facing the fact that getting in on the ground floor can be a sweet ride and can reap heavy rewards. Getting a low price on stock options, prior to large and continued company growth is a smart play.
People for decades and decades have purchased stock options for thousands and cashed out for millions and millions of dollars. One of the most important parts of that process is startup legal expertise. Ensuring the company is properly allocating stock options and series is critical to long term success of the company. Proper startup legal also ensures the employee who purchases stock options is protected within the organization. Consider a sale of the company happens, you will want everything legal in tip top shape.
Investment opportunities are a phenomenal advantage. If there is no expense to the representative as decreased compensation or advantages. In that circumstance, the representative will sin if the stock value transcends the activity cost once the alternatives are vested.
An investment opportunity award gives a chance to purchase a foreordained number of portions of your organization stock, at a pre-set up cost, known as the activity award, or strike cost. An investment opportunity is considered, in the cash when the basic stock is exchanging over the strike price.
An investment opportunity is the option to purchase a particular number of portions of organization stock at a pre set cost. Otherwise known as the activity or strike cost, for a secured timeframe, typically following a foreordained holding up period, called the vesting period. Most vesting periods are anywhere from a year to five years.
Many rich Chief Executive Officers gained their wealth in unexercised stock options that far outstripped their performance in personal pay from the company. It is pay tied to performance and this can be very advantageous, to not only the CEO but the employees as well. Of course stock options could potentially decrease in value, this helps to ensure a stronger drive amongst a corporation’s people to deliver great and lasting results.
Stock options are worth it, when applied after the right start up legal work. The last thing you would want to do is invest in stock options with poor legal work at the helm. Getting the proper legal knowledge and start up knowledge is the recipe for success. Be sure to seek out the best pros for advice to make wise decisions with the right choice, and right thing to do for you and the company. This could be the difference between sweet success cashing out your stock options down the road. Join the winners and watch your wealth grown as you work to do your part within the corporation. Talk to seasoned venture capitalists, lawyers, and successful investors to gain the wisdom of their experience, success and learn from their past mistakes. Educate yourself as much as you can and dive into the stock option playground with confidence!
George is the CEO of Expat Group Limited, based in Hong Kong.