Giving: is money better than options?
|January 5th, 2012|
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 . 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?
 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.
 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.
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