Giving: is money better than options?

January 5th, 2012
ea
When I joined Cogo Labs, about a year ago, I started getting about a third [1] of my pay in stock options. Being risk neutral in donating, I decided to spend my salary on me and donate any proceeds from my stock options. This let me increase the fraction of my pay I was giving away without decreasing what I keep. Mathematically and economically, considering just what I can give, I think this was the right decision.

The problem is, much of my potential impact is from convincing others to give, and if I have to talk about stock options, expected value, and money that I intend to give away it's confusing and distracting. Things were much simpler saying "we lived on about $22,000 and gave about $45,000". Should I switch back to giving money?

It would not be an easy switch. Options represent a small chance of a lot of money, and they're not very valuable to me personally. (Each additional dollar is worth less than the last). If I were to start giving a third of my compensation away as cash, that would be about 2/3 of my paycheque [2]. Which would be pretty hard. Maybe I should donate some combination of cash and options? Making this more complicated, I had negotiated more options in exchange for a $10K lower salary, figuring that for money I was giving away this was the right thing to do. Suggestions?


[1] You might say "how can you say 'about a third' when you have no idea whether your stock options will even be worth something ever?" What I did was estimate how likely I thought Cogo Labs was to be worth $X in about ten brackets ($0, $10M, $50M, ...), and then calculate an expected value as $0*P_1 + $10M*P_2 + $50M*P_3... Then I multiplied by the fraction of the company whose options would vest to me each quarter, and got something about half my quarterly salary. So: one third of compensation.

[2] It's 1/2 my salary (the last third is options) but 2/3 of takehome pay because 1/6 of my pay goes to taxes and other paycheque deductions.

Referenced in: Leaving CogoLabs, Joining Google

Comment via: google plus, facebook

Recent posts on blogs I like:

On Polarization

weirdmaxxing as a dating strategy

via Thing of Things March 14, 2025

Frozen meals are actually great

I cook most of my meals and am pretty frugal. I do a lot of meal prep (cooking in bulk), so I don’t have to cook every day in order to have food. But sometimes I run out of my meal prep or just want something different, and don’t have energy to cook somet…

via Home March 7, 2025

Breakfast Over February Break

Over February break I made breakfast for me and Nora three days in a row. Normally, my dad makes me, Nora, and Lily breakfast, but my dad and Lily were on a trip and my mom wasn't up yet so I was basically the only one in the house who was awake and cou…

via Anna Wise's Blog Posts March 1, 2025

more     (via openring)