Startup Employees Need More Than 90 Days to Exercise Options

Strong personal belief - startup employees should get more than 90 days to exercise their stock options.

In Q1 of this year, only 20% of option grants that were terminated had a PTEP (post-termination exercise period) over more than 90 days.

So the vast majority of employees are faced with an acute financial decision: do I exercise these options right now in the hopes of a future liquidity event or do I let the equity I worked for return to the company?

(and of course many of those employees are making that decision on very short notice because they've been laid off).

I think this sucks and should change.

As the data shows below, in times of high layoffs founders and boards 𝗱𝗼 make some adjustments to the PTEP on employee equity. Look at how the percentage of extended PTEP shot upwards during the severe layoffs of Q2 2020.

No good reason extended PTEP should not become the norm. Yes there are administrative burdens and some tax implications and potential for increased dilution for the founders.

But the employees earned these options through their tenure and they should have longer to decide whether they want to purchase them. Simple as that.

Full Q1 data out for founders, investors, and employees tomorrow 🙏

#cartadata #exerciseperiod #equity #compensation #startups