I received an offer letter with with the option to convert part of the salary to stock options as per the below table. Base salary is ₪33K/month (Israeli Shekel). Be aware of '₪' vs '$' in some columns. As of this writing the exchange rate is 1$ = 3.7₪.
| Salary Deduction | Run-Rate Value | Number of Options | % | Value at $3.45B |
|---|---|---|---|---|
| ₪10,000 | $133,333 | 50.0 | 0.032% | $1,100,000 |
| ₪8,000 | $106,667 | 40.0 | 0.025% | $880,000 |
| ₪6,000 | $80,000 | 30.0 | 0.019% | $660,000 |
| ₪4,000 | $53,333 | 20.0 | 0.013% | $440,000 |
| ₪2,000 | $26,667 | 10.0 | 0.006% | $220,000 |
Additionally the letter states:
Based on current run-rate, price per share is $2,675.
Exercise price will be at 90% discount of the last (at the time of signing) round price. If you are an American citizen, exercise price will be according to 409a valuation (~$800 per-share).
End of Offer Details
I would appreciate any help in understanding this information. What I'm mainly confused about is:
- Does "Run-Rate Value" mean current value or something else?
- Does "Exercise price will be at 90% discount" mean I pay 90% or 10%?
- Does "the last (at the time of signing) round price" refer to the $2,675/share stated above?
- What is the significance of the 4th and 5th columns?
- Does it make sense to forfeit some salary continually and indefinitely, in exchange for a discount in stock? It seems to me, intuitively at least, that eventually the loss in salary deduction will outweigh the gain of discounted stock. I am an American citizen, what is a 409a valuation?
Thank you to anyone who can help me understand this.
Submitted November 01, 2018 at 08:24AM by hash255 https://ift.tt/2AFFoXn
