Archive for April, 2009
I wondered if they had in fact been fired, but one of my more experienced colleagues-a definite insider-explained what was going on. The folks, who left, he said, had joined the company in its early stages, more than a year before the IPO, when the company has just a couple of dozen employees and shaky prospects. In order to attract new hires, a company gave out large stocks grants, at prices of just pennies per share. When we went public the folks who joined early were already vested in tens of thousands of share at a strike price of pennies per share. They were too junior to get caught in the six-month lockout; once they were out, they had sixty days to buy their vested shares at the option price and they hold or sell.
If they get in, get out, get rich strategy strikes you as a bit disputable, then there’s the next best alternative to consider: get those penny shares and stay on for at least for years. The share price may roller-coaster over the months, but if you have penny shares the company has to really crater before your shares are out of the money. Over four years, there is a nice averaging effect if you sell out monthly. My colleagues call it VIP, for “vesting in peace”. The ones I know who got it right seem to buy a lot of new cars and other toys.