Understanding stock options in a startup

Stock options are a unique way that many startups, like Ellie, reward their employees. Simply put, they give employees the chance to buy shares in the company at a later date. This means you can become an owner of the company without having to spend any money upfront.

“Simply put, options give employees the chance to buy shares in the company at a later date.”

“At Ellie, you get an opportunity to join the option program after your trial period ends, typically six months into your contract”, Johannes says.

How does joining the option program work at Ellie?

“It's voluntary. You sign a legal document, but it doesn't cost anything and there are no consequences if you choose not to participate. If you do sign, you get the option to buy shares when the company sells or exits. After the vesting time, you can also turn these options into real shares”, Johannes explains.

Are there tax implications when you join an option program?

One thing that might also be new to you is the tax implications of joining an option program.

“Owning options or even shares isn't the same as having cash in hand. It doesn't mean you'll suddenly have a huge taxable income. But it's always a good idea to do your research or seek advice if you're unsure”, Johannes says.

Why does Ellie offer an option program?

“It's a standard practice among many startups, especially after getting funding from investors. The idea is to set aside a certain percentage of the company for the employees. This helps Ellie compete with other companies, not just with salaries, but by making employees feel more involved in the company's success”, Johannes explains.

At Ellie, we're open about this process! We've already explained how it works to our team and will continue to share details. The goal is to make it as clear as possible so everyone understands what it means to have options versus owning actual shares.

“In the long run, we believe this program will benefit our employees, especially as Ellie grows internationally. It aligns everyone with a common goal: the company's success. And, even as we plan to raise more funding in the future, we'll always have options available for our team”, Johannes says.

How many options can you get?

How many options you get depends on your role at Ellie. We categorize roles into three levels: mid-level, senior and C-level executives or key managers.

Mid-level employees can work independently, and seniors are in addition able to coach others and share knowledge throughout the organization. As you grow and progress in your role, so do your options.

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Impact on Ellie’s employees

Ellie's stock option program is more than just a benefit – it's a statement of trust in our team and our future. We believe in the potential of our employees and want to reward them for their contributions. This program is our way of saying 'thank you' for believing in us and enduring the ups and downs of startup life.

“This program is our way of saying 'thank you' for believing in us and enduring the ups and downs of startup life.”

“At Ellie, we see ourselves as a tight-knit team working towards a common goal. That's why it makes sense for our employees to own a piece of the company. It's exciting to think that when you work here, you're not just an employee – you're a part of the company. You own a slice of the pie”, Johannes says.

Potential earnings

We understand that discussing money can be tricky. It's tempting to speculate about potential earnings from an exit, but it's also risky.

“So, we prefer to give a general idea rather than specific figures. We're talking about significant potential rewards, but it's important to remember that in a startup they're not guaranteed”, Johannes says.

Finally, to our future team members, we want you to know that at Ellie, your professional growth matters. Through initiatives like our stock option program, we aim to give you a stake in our success.

“Some may be skeptical about the benefits of such option programs, but those who've experienced it know its potential. We're excited to share this journey with you, and together, we can make Ellie a global success”, Johannes says as his closing thoughts!

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