• Posts
  • RSS
  • ◂◂RSS
  • Contact

  • Giving: is money better than options?

    January 5th, 2012
    giving  [html]
    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.

    Comment via: google plus, facebook

    Recent posts on blogs I like:

    What I've been doing instead of writing

    I’ve been too busy with work to write much recently, but in lieu of that, here’s a batch of links to other stuff I’ve been doing elsewhere. The thing I’m most excited about: Wave raises $200m from Sequoia, Stripe, Founders Fund and Ribbit at a $1.7b valuati…

    via benkuhn.net September 11, 2021

    Some reasons to measure

    A question I get asked with some frequency is: why bother measuring X, why not build something instead? More bluntly, in a recent conversation with a newsletter author, his comment on some future measurement projects I wanted to do (in the same vein as ot…

    via Posts on Dan Luu August 27, 2021

    Songs about terrible relationships

    [Spoilers for several old musicals.] TV Tropes lists dozens of examples of the “I want” song (where the hero of a musical sings about their dream of escaping their small surroundings). After watching a bunch of musicals on maternity leave, I’m wondering h…

    via The whole sky July 17, 2021

    more     (via openring)


  • Posts
  • RSS
  • ◂◂RSS
  • Contact