Stripe faces $3.5B tax bill as employees' shares expire
(Uninvolved growth-stage CFO perspective)<p>The IRS mandates that stock option grants expire after 10 years. My best guess is these early employees are quickly approaching those grants&#x27; 10 year mark, and face an exercise or &quot;lose it&quot; situation.<p>If you exercise, you have to pay the gain. For early employees, this could&#x2F;would be a massive bill -- probably well into the 7-8 digit range for some early hires.<p>Stripe seems to be teeing up a secondary sale of these stocks themselves -- where Stripe is offering to buy some of their shares back from those early employees, allowing the employees to exercise (&#x27;buy&quot;) all of those early options and (at least) pay their tax bill.<p>Usually, a company will limit the # of shares eligible for a secondary purchase so current&#x2F;former employees can buy all the stock, sell enough to the company to cover that person&#x27;s resulting tax bill, and keep the remaining stock until IPO. By limiting the # of shares they will allow to be purchased via the secondary, Stripe will almost certainly make sure the secondary does not create post-tax cash gains to make people wealthy!<p>It doesn&#x27;t have to be that way:<p>Stripe could allow ANY investor to buy the shares directly from those employees -- but guessing Stripe has a blocking right on stock transfers-- so they have, and will continue to block early employee sales to new investors. Stripe and many companies have these transfer &quot;veto right&quot; to make sure they can control their ownership (&quot;cap table&quot;) and also to make sure early employees don&#x27;t get rich before the IPO.<p>This is my best guess-- I am not familiar with the Stripe&#x27;s situation.