Im an early employee in a start up that is in talks for acquisition. When I joined the company (10 years approx. back) I was granted stock option agreement. I did not do a great due diligence at the time (major error I know) and now that the liquidity event may be approaching, I would like to understand my options in negotiation. Some more background:
-Entities involved are Company is UK based (one up for potential sale). I was the first employee in the USA market (employed under the US entity which is a subsidiary of the UK company)
-Role is COO of the US entity. Im responsible for all US entity tasks.
-When I joined, I was granted stock option not in the UK entity that is potentially being sold, but in a holding company that owns a % of the UK entity. My option agreement was 5% of that holding company
-My stock options vested in 2020. I did not exercise on time. Agreed with my higher ups to create a new option agreement instead of extension as I already missed my exercise deadline. This new option agreement was to add 2% and vesting acceleration immediately upon liquidation event.
-In the process of the negotiation I learned the actual % of the main company that the holding company Im receiving the options owns. With that knowledge I was preparing to ask for either A.) equity in the main company at 5%, or B.) a higher percentage of ownership in the holding company.
-In the midst of this negotiation, company acquisition offer came in. Therefore Im currently sitting with no stock, or option agreement
-In discussing this with higher ups, they proposed to compensate in the form of a management carve out instead of the stock option. Because my stock option is in the holding company that owns only a % of the main company, they explained the carve out would net me more in the end.
Im uncomfortable about this. I have been putting my life into this company for 10 years and helped us grow to this point. My question is how to proceed from here:
-Do I come back now and make a case that I deserve equity in the main company, proposing a %? Should I be asking for common stock or stock option? Is it too late?
-Do I drop the stock and option stuff and focus on negotiating the management carve out?
Thanks in advance for any guidance. Ive learned the valuable lesson in my oversight of negotiating this originally. Now I need to make sure I take the right actions, and pretty fast as this sale looms
Curious to know if this is something that's common or legally required by law. Is full vesting the unvested portion of acquired startup's employee shares a standard practice in the startup tech scene?
There might also be state laws around this. I'm curious to know how this works in California. Any information on this is greatly appreciated.
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