The myStockOptions Blog

Instacart IPO: Long-Awaited Liquidity For Employee RSUs And Stock Options

After hinting at an initial public offering (IPO) last year, delivery service Instacart has finally gone public with a listing on Nasdaq. It is the highest-profile venture-backed company to go public since the end of 2021. The IPO has been heralded as a sign of a potential resurgence in initial public offerings after a dearth in 2022 and the first half of 2023.

As with many later-stage startup companies, Instacart’s initial public offering (IPO) is as much about its human capital as its financial capital. Grants of restricted stock units (RSUs) and stock options are important forms of compensation for Instacart employees—but to cash in, they needed a liquidity event for the company’s stock.

That is why, in an interview with CNBC on IPO day, Instacart CEO Fidji Simo proclaimed: “This IPO is not about raising money for us. It’s really about making sure that our employees can have liquidity on stock that they worked very hard for.”

Filed under its formal corporate name Maplebear Inc., the company’s S-1 registration statement with the Securities and Exchange Commission (SEC) discloses details about Instacart’s equity programs for employees.

RSUs With Double-Trigger Vesting

Larger, later-stage pre-IPO companies often grant RSUs instead of stock options for many reasons, including concerns about shareholder dilution and high valuations leading to exercise prices that go underwater. Instacart is no exception. In its later stages before going public, the company moved in a big way from grants of stock options to grants of RSUs. No stock options were granted at Instacart in 2020, 2022, or the first six months of 2023.

The equity capitalization table from its S-1 shows the following total outstanding grants as of June 30, 2023, for its non-voting common stock:

Stock Options	29,910,133
RSUs	63,467,028

In a now common practice for later-stage pre-IPO companies, Instacart structured its RSU grants (and some of its stock options) with both the usual service-based vesting plus a second vesting condition that requires a liquidity event for the grant to fully vest:

1. With service-based vesting, you must work at the company for a specified period after grant. The service-based vesting period for these awards at Instacart typically runs four years, with a cliff vesting for part of the grant at one year of service followed by continued vesting monthly or quarterly.
2. With vesting based on a liquidity event, vesting conditions are met upon the earlier of (1) a change of control (e.g. a merger or acquisition) or (2) the effective date of a registration statement for an initial public offering of the company’s common stock.

Instacart also has some grants that vest only upon the satisfaction of both service-based vesting conditions and market-based vesting conditions (e.g. the achievement of specified future valuation or capitalization amounts). To make it even more of a puzzle to grasp all their different equity grants, the company made others that vest only upon the satisfaction of service-based, liquidity-event-based, and market-based vesting conditions.

Tax Hits For Employees

Many of Instacart’s employees have grants that met their vesting conditions immediately after the IPO. This will result in a big tax bill for employees when the shares are delivered. In fact, the value of the shares they receive will probably push most employees into the top tax bracket for all of their income in 2023—the one potential downside to the liquidity and wealth the IPO creates for them.

The S-1 registration statement explains that the company assumes a 47% tax-withholding rate for holders of its RSUs and shares of non-voting restricted stock that will vest and settle in connection with this offering. The company will automatically withhold shares from the RSU grants to pay the taxes owed, a practice referred to as “net settlement.” Instacart assumes a 43% tax-withholding rate for holders of its stock options, mostly via net option exercises.

$2.6 Billion Financial Impact

The use of stock compensation and the immediate non-cash accounting expense for the way the grants are designed to vest is so large that Instacart states the following in its registration statement (our bolding for emphasis):

“In the quarter in which this offering is completed, we will recognize approximately $2.6 billion of stock-based compensation expense associated with the satisfaction of the liquidity event-based vesting condition for outstanding RSUs and shares of outstanding restricted stock, for which the service-based and/or market-based vesting conditions have been fully or partially satisfied on or before August 15, 2023. As such, we expect to incur a net loss for the quarter and year in which this offering is completed, primarily as a result of recognition of this stock-based compensation amount.”

Amid dilution concerns, the company’s growing cash position enabled it to offer cash alternatives to employees. For example, the registration statement disclosed that in April 2023 it offered employees the choice to elect cash in lieu of a portion of certain equity awards.

Lockup Of Employee Shares With Potential For Earlier Sales

The liquidity for employees that Instacart’s CEO mentioned is not immediate. Instacart did separately register on SEC Form S-8, for employees’ public resale, all of the shares of common stock issuable under its previously granted equity incentive awards, along with those the company will grant in the future under its new equity incentive plan and separate employee stock purchase plan (ESPP).

Employees still will need to wait 180 days to sell their shares under the standard post-IPO lockup provisions. The S-1 registration statement reveals an exception that allows earlier sales during an open trading window should the stock trade at more than 120% of its IPO price for at least five of ten consecutive trading days. One of those days must occur after the company’s first quarterly earnings announcement.

Further Resources

Equity compensation is a key benefit for many employees at private companies, from startup to IPO or M&A stages. myStockOptions has articles, FAQs, videos, and quizzes that explain all aspects of private company stock compensation, from the basics to tax and financial planning.

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Private Company Stock Grants: Recent SEC Filings By Uber And Other IPO Companies Reveal Plan Design Trends

Uber, Lyft, Pinterest, Zoom: Some major private companies in the tech sector have recently gone public or are about to. This is a big moment for their employees who have stock grants. A question we at myStockOptions.com are often asked: How do stock grants work in privately held companies?

Filed with the Securities & Exchange Commission (SEC), the Form S-1 registration statements of IPO companies show trends in these grants. These filings also reveal that the stock options and restricted stock grants that private companies make are often more complex than the standard types of grants used by public companies.

Typical Stock Options And Restricted Stock

The standard variety of employee stock options allows you to exercise the options only when they have vested, usually after you have worked at the company for a specified time. With restricted stock and the now more commonly used restricted stock units (RSUs), the event that triggers vesting is employment for a set period after the grant date and/or perhaps the attainment of specified company performance goals.

Example: You have a grant of 10,000 stock options or RSUs that vest 25% after the first anniversary of the grant, and then 25% yearly for the next three years (i.e. four-year annual vesting). After the first year 2,500 options vest and are exercisable (or 2,500 RSUs vest), and a similar number vest annually from there.

Private Company Stock Options And RSUs Can Be Different

One big difference in private companies is the illiquidity of the stock. Employees cannot sell shares at exercise or vesting, even to pay the taxes owed on the income recognized. This lack of liquidity, along with securities-law restrictions on resales of stock, does not delay the tax-measurement date at option exercise or restricted stock vesting.

Given the vastly differing liquidity situations of private and public companies, having the same tax treatment for stock grants at pre-IPO and large publicly traded companies seems out of balance. To address this issue, a provision in the Tax Cuts & Jobs Act (tax reform) created “qualified equity grants” for private companies under the new tax code Section 83(i). While this alters the standard tax treatment when various conditions are met, in its current form this provision will get little use. (For details, see our past blog commentary on it.)

However, long before this provision came along, smart lawyers and accountants had already come to the rescue. Operating within the existing tax laws and IRS regulations, they developed new structures for stock option grants and RSUs at private companies that work around the standard tax treatment. You can see this widespread use in a review of the Form S-1 registration statement filed with the SEC by Uber Technologies (April 11, 2019 draft), and in the effective registration statements for the now-public companies Lyft, Pinterest, and Zoom Video Communications.

Early-Exercise Stock Options

One of these equity innovations for employees at private companies is early-exercise stock options. Instead of letting you exercise options only after the vesting date, when you might face a big taxable spread between the exercise price and the fair market value of the stock, the company instead grants options that are immediately exercisable. When you exercise the options, you receive restricted stock with a vesting schedule identical to that of the option grant. Until vesting occurs, if your employment ends your company has a repurchase right in the stock.

The advantages to these types of option grants is that you exercise when the spread is $0 or very small and start the capital gains holding period. A major risk is that to profit from these options you need the shares to become liquid, whether through an IPO, M&A deal, or private resale market. Uber seems to have used early-exercise stock options in its initial stock plans (see pages F-8 and F-55 of its S-1 registration statement), as did Zoom (see pages 101-105, F-6, and F-29 of its S-1).

Alert: To get this tax treatment, you should make a Section 83(b) election and file it within 30 days of exercise with your local IRS office, whether you are exercising nonqualified stock options (NQSOs) or incentive stock options (ISOs).

Restricted Stock Units With Double-Trigger Vesting

Larger, later-stage pre-IPO companies often grant RSUs instead of stock options for many reasons, including concerns about dilution and about high valuations which could lead new option grants at that exercise price to go underwater. This shift from stock options to RSUs is found in Uber’s registration statement. See the tables below from page F-56 of its Form S-1. These show a big difference between the number of stock options recently granted and the number of RSUs granted.

Vesting Structure Impacts RSU Taxes

The standard tax treatment of RSUs triggers taxes at vesting. However, because a private company's stock is illiquid, employees at private companies cannot sell shares to pay those taxes. In this situation, some private companies with enough cash may either lend employees money for the taxes or provide a cash bonus that covers them (this can be done for stock options too). But many private companies now structure their RSU grants to add  a second vesting provision, which requires a liquidity event for the grant to fully vest.

For example, in various places in Uber's Form S-1 (e.g. pages 15, 108, 142) and in Pinterest's S-1 (e.g. pages 7, 32, 76, 82), the filing states that RSU grants (and some options) have both service-based vesting and liquidity-event-based vesting. Some employees meet both conditions immediately after the IPO, facing a big tax bill, and others just the second condition. The big downside to this structure is that suddenly employees owe huge taxes on shares that are likely to be much higher in value than when the grants were made.

Employees are also then bumped up into the top tax brackets for all their other income, whether salary or capital gains, because of this income hit from the IPO timing that they cannot control. Lyft reveals a 42% withholding rate (page 15) while Pinterest used 48% (page 11). Should your grant fully vest in an IPO, welcome to the top income-tax bracket (though hopefully also a high level of wealth).

Tax Withholding

Most companies automatically withhold shares from the grant to pay the taxes owed, sometimes referred to as net settlement. Employees do not need to come up with the cash, though some would like to keep the shares instead of this indirect form of diversification through share withholding. The obligation of the company to fund the tax liabilities with the withheld shares, which requires the company to send cash and not shares to the IRS to pay it, can create an onerous financial and administrative burden for the company.

Companies often disclose that funding withholding taxes is one of the uses for IPO proceeds. This could affect a company’s financial condition or add to dilution, according to risk factors disclosed by companies, as in Uber’s SEC filing (see page 69). Alternatively, companies can allow for stock sales for taxes by employees as an exception to the lockup, as Uber discloses on page 266.

Additional Resources On Private Company Stock Grants

For more information about stock grants in pre-IPO and post-IPO companies, see the section Pre-IPO at myStockOptions.com. For a one-day live event covering these topics, consider attending the myStockOptions.com national conference in San Francisco (details below).

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Here We Grow Again: myStockOptions.com Expertise Expands With New Articles On Diversification, IPOs, And Foreign-Asset Reporting For Employees With Equity Compensation

At myStockOptions.com, our array of award-winning articles on all aspects of equity compensation has grown. In recent weeks, we have welcomed new contributions from expert authors on three crucial topics.

Importance Of Diversification For Employees With Equity Awards And Company Stock

Through its author's personal example, a new article at myStockOptions.com presents the dangers of a concentrated stock position, discusses why diversification may be hard for employees with shares from equity compensation, and explores strategies for preserving your net worth. In Your Company Stock: The Importance Of Diversification, CFP Laura Tanner recounts her experience with stock compensation at a company where she used to work as a research scientist, and she explains the lessons she learned.

To read the article and find more insights into investment diversification for employees with stock options, restricted stock/RSUs, or ESPPs, see our section Financial Planning: Diversification.

Careful Planning For Pre-IPO Equity Comp When The Company Goes Public

Initial public offerings (IPOs) are on the rise. The high-profile IPOs of Facebook and Twitter are just two of many IPOs that have been launched over the past couple of years, including several in Silicon Valley. In the newest installment of our Stockbrokers' Secrets series, our pseudonymous financial advisor W.E.B. Bantling provides a pep talk about smart planning for pre-IPO stock options, restricted stock, or RSUs when the company goes public. At the time of the IPO, when the company finally pours long-awaited liquidity into those grants, planning considerations must be carefully weighed.

In the author's experience, clients at companies preparing for an IPO are often giddy with thoughts of the wealth and opportunities it will provide. Many of them have worked at these companies since the startup stage, and the IPO represents a long-awaited event that may be life-altering for both their company and them. However, the author always emphasizes five planning points that may help to manage employee expectations in an IPO situation. He shares some of this wisdom in the new article, Stockbrokers' Secrets: Financial Planning For Equity Compensation At IPO Companies, available in our section Pre-IPO: Going Public.

International Equity Awards And Company Stock: Tricky Rules Of IRS Reporting For Assets And Income In Foreign Financial Accounts

United States citizens and resident aliens are taxable on their worldwide income. The related IRS reporting rules are complicated, and mistakes can lead to costly penalties. In fact, the IRS has launched an aggressive initiative to identify taxpayers with unreported foreign income and/or assets in foreign financial institutions. Charges of tax evasion stemming from unreported foreign income have been brought against dozens of individual taxpayers, including bankers, lawyers, and advisors.

In a new article at myStockOptions.com, compensation and tax expert Richard Friedman presents the rules and related issues of IRS reporting for assets and income that an international US taxpayer may hold in a foreign financial account—including those acquired through stock options, restricted stock, RSUs, or other equity awards. The article, International Equity Awards And Company Stock: The Confusing World Of IRS Reporting For Overseas Assets And Income, is available in our section Financial Planning: High Net Worth.

License Our Expertise For Your Employees

For companies, education is vital for ensuring that stock compensation motivates and retains highly valued employees and executives. All of our expert yet reader-friendly articles, FAQs, and other content are available for licensing by companies that want to improve their stock plan education and communications for participants. Content licensing is just part of the suite of corporate services that we offer.

Stock Compensation At Twitter: IPO Registration Statement Reveals Twitter's Extensive Use Of Restricted Stock Units

When a high-profile company prepares for an initial public offering (IPO), its SEC filings provide an opportunity to analyze the company's stock compensation practices. The IPO of Twitter—about as high-profile as you can get—is expected to occur by mid-November. Twitter's Form S-1 (Amendment No. 1, filed on Oct. 15, 2013) discloses its extensive use of restricted stock units over stock options (see the table on page 88). Apart from awarding stock options to its senior executives (see page 128) and using options in relation to acquisitions (see pages 136–138), Twitter seems to exclusively grant RSUs.

RSU Grants At Twitter

Under Twitter's 2007 equity incentive plan, RSUs granted to domestic employees before Feb. 2013, and all RSUs granted to international employees (the pre-2013 RSUs), vest upon the satisfaction of both a time-based service condition (mainly four years) and what Twitter considers a "performance condition," which is actually more like a vesting condition based on a liquidity event for the company. The performance condition is satisfied on the earlier of either (1) the date that is (a) six months after the effective date of this offering or (b) Mar. 8 of the calendar year after the effective date of the offering (which the company may elect to accelerate to Feb. 15), whichever comes first; and (2) the date of a change in control. (Details about the company's prior RSU grants appear in a letter Twitter submitted to the SEC in September 2011 to request a Section 12(g) exemption from registering its RSU plan under the Securities Act of 1934.)

While the vesting of these RSUs will cause dilution (see page 47), the amount of dilution will be is much less than it would have been with stock options. (Grants of options have to be much larger to deliver the same compensation grant-date value as RSUs.) The vesting of the post-2013 RSUs is not subject to a performance condition. Instead, the grants have just the standard time-based vesting over a period of four years (see page 86). For future grants after the IPO, Twitter is adopting a stock plan for 2013 that will be effective on the business day immediately before the effective date of the registration statement; it will then no longer make grants under its 2007 plan (see pages 130–132). Twitter is also planning to roll out an ESPP with appealing features (see pages 133–134).

Earnings Charge For Stock Grants

As of Sept. 30, 2013, no stock-based compensation expense had been recognized for the pre-2013 RSUs because a qualifying event meeting the performance condition was not probable (i.e. the grants had not fully vested). In the quarter during which the offering is completed, Twitter will begin recording a stock-based compensation expense based on the grant-date fair value of the pre-2013 RSUs. If this offering had been completed on September 30, 2013, the company would have recorded $385.2 million of cumulative stock-based compensation expense related to the pre-2013 RSUs on that date; and an additional $199.6 million of unrecognized stock-based compensation expense related to the pre-2013 RSUs would have been recognized over a weighted-average period of about three years. In addition to the stock-based compensation expense associated with the pre-2013 RSUs, as of Sept. 30, 2013, the company had an unrecognized stock-based compensation expense of approximately $698.3 million related to other outstanding equity awards (see pages 24 and 86–87).

See myStockOptions.com for additional information on restricted stock units, pre-IPO stock grants, and the rules on the timing of employee stock sales after the IPO.

Lockup Ends At Facebook: Will Employees Sell Stock? What's Next For Facebook's Stock Compensation?

Earlier this year (see 23 April and 25 May), as Facebook was in the process of going public, we looked at Facebook's S-1 registration statement, the taxes for employees and the company stemming from its IPO, and the potential issues for employees. Most of the company's pre-IPO stock compensation, which became almost all restricted stock units (RSUs) in 2007, vest after two conditions: a specified length of employment at the company plus a specified length of time after a liquidity event such as an IPO. In its prospectus, Facebook disclosed that vesting and employee share delivery would occur between 151 to 180 days after May 17, 2012, as the company can do this 30 days before or after the date when the liquidity condition is satisfied.

The company moved the vesting date forward to October 25 for current employees, who hold 220 million RSUs, and the net amount of shares are eligible to be sold starting today, October 29 (see the 8-K filed on September 4). The company waived the market-standoff provisions that had prohibited employees from selling or otherwise transferring any of their common stock or securities convertible into or exchangeable for shares of common stock until November 14, 2012. For its former employees and nonemployee directors, who hold 51 million RSUs, the vesting and settlement date is still November 14, 2012 (see page 9 of the 10-Q referencing this).

The end of the lockup became a major news story that attracted coverage by television news media (see video from ABC station KGO-TV in San Francisco), along with scrutiny by various news outlets (e.g. an article at CNN Money) and blogs (see posts at All Things D and Policy Mic). They all wonder what Facebook employees will do with their stock, which has a total value of over $5 billion.

Almost all the news reports also noted that employees will owe taxes on the income from these pre-IPO RSUs at ordinary income rates. For many, this will equal 45% of the value of their shares. Commentators also discuss Facebook's intention to net-settle the shares at vesting, instead of leaving employees to sell shares for the withholding taxes they owe. According to CNBC, Facebook explained during its earnings call that it would withhold 120 million shares from the vested RSUs to cover roughly $2.4 billion in taxes. Facebook will use its own cash and credit lines to pay the estimated tax bill, according to the article at CNN Money.

The big question many of the journalists and bloggers try to answer is whether many employees will sell their stock. We also wonder whether Facebook will consider granting stock options. Given the company's lowered stock price, stock options would offer attractive value for current employees, would help with corporate recruiting, and would send a message to the market about its growth potential.

Facebook Stock Comp: A Status Update

Earlier this year, we blogged about the potential stock comp wealth (and related tax issues) that seemed certain to blossom for Facebook employees amid the company's much-hyped initial public offering in May. Time and the market have popped these balloons of expectation. Although investors were predicted to "like" Facebook stock in huge numbers, skepticism about the company's valuation and prospects has prompted significant investor flight over the past few weeks. The surprising plunge in the stock price has created unexpected difficulties for the company's equity compensation.

Angst among Facebook employees about their equity awards has been widely reported (e.g. by Reuters and Business Insider). While the expiration date of the lockup on most employee shares (almost 50% of total shares outstanding) is still fairly far off (Nov. 14), Reuters notes that some employees are already adjusting their expectations because of the poor post-IPO performance. Many now plan to sell a smaller portion of their stake in the company than they otherwise would have if the stock price had risen or even just stayed flat. "I will definitely take some," said an employee anonymously quoted in the news report. "But my debate is how much." The article in Business Insider wonders whether Facebook may develop problems with employee retention, at least in the short term.

Additionally, Facebook needs to raise cash for the taxes ($2.5–4 billion) incurred by its share withholding at RSU vesting, and it has been planning to sell shares to cover this. Because of the fallen stock price, financing that tax bill will now be more difficult than expected.

Facebook employees who joined the company during the past 18 months (perhaps half its workforce) were granted restricted stock units (RSUs). This is fortunate for them. Unless the underlying stock price drops to zero, RSUs always have some value. Stock options, by contrast, would be well underwater, as the exercise price would reflect the pre-IPO stock valuation—much higher than the current depressed price. Before the IPO, various option-valuation models gave Facebook stock a worth of $24.10 during the first quarter of 2011 and around $31 in the first quarter of 2012. Now that the stock price is below these thresholds, the golden handcuff would have lost its lure for restless employees.

In this blog we have also discussed Zynga's pre-IPO demand for nonproductive employees to give back large unvested stock grants. Bloomberg has revealed that Zynga is now broadly granting stock options to retain staff after a fall in the company's stock price. Like Facebook, Zynga had previously granted mostly RSUs. The reasoning behind the switch seems clear. Stock options have much more upside than restricted stock. In short, you get more options per grant, and the fixed purchase (exercise) price provides investment leverage. As a result, options have the power to generate much greater wealth from stock-price appreciation than restricted stock/RSUs do. This, in turn, may help to keep employees at the company.

If Facebook believes its stock is unreasonably depressed, we wonder whether it too will start proffering the golden carrot of stock options to motivate and retain employees. This move could also signal some much-needed optimism about Facebook stock. If or when the stock price does rise, these options would be much more valuable and attractive than RSU grants.

Million-Dollar Question: A Week After The IPO, What's The Latest On Facebook's Stock Comp?

It's been one week since Facebook's initial public offering. Last month, this blog provided various insights into the company's stock grants and the related tax issues for Facebook employees.

As we mentioned then, and as Facebook's registration statement (page 48) explains, the restricted stock units granted by the company before 2011 will not pay out and fully vest until six months after the IPO. They face two vesting hurdles: time worked at company and a liquidity event (i.e. the IPO). We have seen these types of vesting requirements in grants made by some other pre-IPO companies, such as Twitter (see an FAQ at myStockOptions.com).

Facebook continues to rely on the broad use of RSU grants, though these will vest in the standard time-based way. In the 6th amendment to its S-1 registration statement, the company disclosed that in early May it awarded more than 25 million RSUs in what it termed "employee refresher grants" (see page 78 of the S-1 and an article at the blog TechCrunch).

Now for the million-dollar question (literally). How much wealth has the IPO created for employees at Facebook? How many are now millionaires? According to Aaron Boyd, Director of Research at the compensation research firm Equilar, at the time of the IPO the average paper value of equity per employee was $4.9 million (excluding CEO Mark Zuckerberg's vast holdings). Equilar used the information in the prospectus for the most recently completed quarter for the number of options and restricted stock outstanding as of March 31, 2012, and calculated the values with the IPO price. In an article on May 21, The Washington Post reported that 600 of Facebook's 3,700 employees and 250 former employees will become millionaires, according to PrivCo, a research firm.

The wealth created for senior executives will be much greater. An insider of a company registering stock for the first time under Section 12 of the Securities Exchange Act must file Form 3 under the SEC's Section 16 rules no later than the effective date of the registration statement. It's worth looking at the data in these fillings by Facebook insiders for the stock grants and outright stock holdings and how they are reported with the SEC on Form 3.

For example, the Form 3 for CFO David Ebersman shows he holds 1.2 million RSUs that vest quarterly between early 2012 and early 2019, along with options to buy 4.5 million shares at $3.23 per share. These began vesting in 2010, starting with a fifth of the grant, followed by monthly tranches that will bring the grant to full vesting by 2015. In a footnote, the Form 3 also discloses that the RSUs he holds in which vesting is based on both continued service and liquidity (additional 6.75 million RSUs) are not considered reportable under SEC rules. The Form 3 for COO Sheryl Sandberg also contains new details on her options and RSU grants, such as the vesting provisions. Mark Zuckerberg's Form 3 discloses his stock options, along with the company stock he owns through various trusts (an estate-planning technique to minimize taxes).

When these executives and other senior executives at Facebook get more stock grants or sell company stock, they will have to make filings on Form 4. In addition, sales will also need to follow the SEC's Rule 144 requirements. These will be worth following, as they may reveal some information about individual financial planning, such as whether sales are made under Rule 10b5-1 trading plans, along with showing any changes in Facebook's stock compensation practices after the IPO.

[For more on Facebook stock compensation, see our blog entry of October 29 about the end of the lockup.]

Griping About IPOs: Too Much Upside?

After a formerly private company has gone public, new riches among employees can cause problems, as noted by a recent piece in the San Jose Mercury News (IPOs Give Companies Instant Wealth But Lots Of Headaches, Nov. 13). The article chronicles some of the distractions: excessive scrutiny of the stock price, envy among employees, or disengagement at work by the newly wealthy. Things can be even worse at companies with broadly granted stock options and restless investors (angels and/or venture capital) who do not see an opportunity to realize any liquidity from their equity grants or investment.

Not surprisingly, the article considers the need for a pre-IPO company to educate employees on the various financial-planning issues they face when the company goes public, along with quickly teaching them the rules against insider trading. At myStockOptions.com, employees and their financial advisors can find educational material on both financial planning with equity awards and the securities laws that apply to people with stock compensation.