That's awesome, glad to see Coinbase leading the charge on employee equity! We've just implemented something similar at Amplitude as well.<p>The 90 day exercise window is one of the biggest "gotchas" of equity compensation, especially for employees who are new to startups. Extending it to 7 years allows the company get far enough along towards liquidity so the employee knows more about whether it's worth it to exercise as well as not forcing them to come up with a lot of cash on short notice. Really glad to see Coinbase taking a stand for fairer compensation for employees.
I wonder if this encourages startups to give less options, since they can be exercised so far in the future? If they know that a certain percentage of their options won't be exercised or will be relinquished, it makes ownership issues much simpler so wouldn't that incentivize giving smaller equity grants?
I like how this only kicks in after two years. That seems like a great compromise in terms of the employee getting initial options right after the cliff, but getting additional benefits after the extra year.
> Most companies allow only 90 days for employees to purchase stock after they leave the company.<p>This is somewhat disingenuous because it neglects to mention that the 90 day exercise window is typically the result of a company offering employees incentive stock options (ISOs). A 90 day exercise window is required by the rules associated with ISOs. Startups can't change the law.<p>When a company allows exercise after 90 days, the options become non-qualified stock options (NQSOs), and those are subject to different tax treatment.<p>In reality, the favorable tax treatment of ISOs often doesn't benefit startup employees, so there's an argument to be made that startups should just offer NQSOs anyway, but that's neither here nor there.<p>The big lie is that extending the exercise window has a high probability of being meaningful. Yes, it's true that companies are taking longer to deliver liquidity, but a lot of companies simply aren't going to deliver liquidity, <i>ever</i>. For those that do, in today's market, where valuations skyrocket early and late-stage investors trade valuation for significant downside protections, many employees will find that their equity isn't as valuable as they expected.<p>If a startup really wanted to stand out and reward employees differently, it would look at alternative approaches, such as bonuses and profit sharing plans, including profit sharing plans that contribute to a 401k. I think a lot of people who are not new to the game would be attracted by alternative structures and incidentally, these would probably do a lot more for retention.
Does the tax treatment change if you exercise > 90 days after leaving?<p>From what I understand, options may be treated as NQSOs rather than ISOs if exercised >90 days after the employee leaves. (source: <a href="http://blog.samaltman.com/employee-equity" rel="nofollow">http://blog.samaltman.com/employee-equity</a>)
While I appreciate the intention behind this, and would probably be grateful to have it available from my current employer (or any other employer for whom I've worked > 2 years), I shudder at the tax implications of exercising options whose strike price is as much as <i>9 years</i> below the fair-market value.<p>Hello, AMT...
I really like all the effort startups are putting into making employee equity more valuable, so awesome job here Coinbase! However, I was disappointed by the headline because I'm always hoping to see someone come up with a solution to the current cultural problem of employee equity's diminishing perceived value.<p>I've thought a lot about it myself and have yet to come up with a solution, but I really feel like it will cause major problems if equity is progressively treated more and more like a near zero value lottery ticket.
This is really great. It really sucks to exercise only to have your stock repeatedly crammed away into oblivion to make room for people who swoop in at the end and take all the value you have created and pocket it.
Isn't the issue the exercise price instead of the time window?<p>Wouldn't it be more effective to keep the time window to 90 days and have the exercise price be under $1 in total?
There's no market in Coinbase stock. They haven't done an IPO, and it's not likely that they will. It's a Bitcoin company, after all.<p>Meanwhile, more info about the Mt. Gox collapse is coming out now that Mark Karpeles has been arrested and is in interrogation.[1] "The police are also investigating whether Karpeles consolidated customer and corporate funds in a bank account held by the company and embezzled around ¥1.1 billion, funneling funds to an account of an affiliate company and for personal use."<p>[1] <a href="http://www.japantimes.co.jp/news/2015/08/04/national/crime-legal/mt-gox-ran-money-six-months-going-bust/" rel="nofollow">http://www.japantimes.co.jp/news/2015/08/04/national/crime-l...</a>
Only for new employees? Is this a backhanded way to try to push early employees out? Why not roll this out for all employees at once instead of generating management-induced divisions?