Am I getting screwed over in my EMI scheme?

rogerbarton

I worked at a startup where I was allocated 3500 shares with 3 year vesting schedule (1 year cliff). At that time, at last round of financing, I was informed the current price was £2.646 per share. I signed initial paperwork.

I left after ~2 years amicably, and have been allocated 2333 shares which is about right. However, now that I'm coming round to sign their new 'EMI share option plan' it says the Type of Share is a 'series 1 share of £0.000001 each in the Capital of the company' and the Exercise Price is £0.01.

As I understand it, the Exercise Price is what I can buy the shares for. But what does the Type of Share mean in relation to £0.000001 per series 1 share? Would really appreciate help on this as I'm not sure on this type of thing and haven't found much luck with anyone else I know! Thank you.

Malthusian

This article on share nominal values may help. The short version is that the "nominal value" of the shares (the 0.000001p) is of no practical consequence.

Presumably the company is not publicly traded and you will only be able to sell your shares when/if the company is bought out by another, or has its IPO. Or possibly when there is another funding round, but it is usually the people in charge who get to cash in their shares when that happens while everyone else has to wait for IPO or buyout.

Whenever you do get to sell your shares, the value you get for them will be based on what the buyers are willing to pay for them at that time.

If the shares are part of your pay package and you only have to pay a nominal £23.33 for them then as far as I can see you have nothing to lose. Why do you think you might be getting screwed?

rogerbarton

Thanks, Malthusian. That guide was useful - as I understand it, nominal share value is basically a requirement to ensure shares can't be given away for free. Hence the ridiculously low price.

I was wary because, although I left amicably, I do perceive the CEO to be a tricky character. Since it all looks rosy, I think I'll go ahead and sign the updated contract. Presumably I should also be entitled to company updates?

Pincher

Have a look at this movie.

http://www.imdb.com/title/tt1285016/

Look out for "dilution".
That's the difference between a billionaire and a millionaire.