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2019

Equity

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Case Western Reserve University School of Law

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Unicorn Stock Options - Golden Goose Or Trojan Horse?, Anat Alon-Beck Jan 2019

Unicorn Stock Options - Golden Goose Or Trojan Horse?, Anat Alon-Beck

Faculty Publications

Large privately held startups valued at $1 billion or more (“unicorns”) are dealing with employees’ conflicts of expectations due to the illiquidity of the shares of stock acquired upon exercise of their options.

Until about eight years ago, many talented workers chose to work for a startup company for a lower cash salary combined with a substantial stock option grant, and the dream of cashing out for a large sum of money after an initial public offering (“IPO”) of the startup’s stock.

Today, unicorns remain private for extended periods of time in part because they are often no longer dependent …