SalesLoft Stock Option Analysis

I joined SalesLoft on 2018-05-21. When I joined, I was given a choice for my compensation. I could choose either $X + $5,000 + 1875 stock options annually or $X + 3750 stock options annually. Basically, if I forwent $5,000 per year in salary, they'd double my number of stock options.

I didn't have a great way of deciding which was the better choice. If I choose more options, I'd be missing out on some salary and I'd have to pay to exercise those options when I left the company. I could use that extra salary and the money saved by exercising fewer options to invest in the stock market. I didn't know if the stock market or SalesLoft was going to grow faster.

I should mention that between the time when I started interviewing with SalesLoft and when I joined, SalesLoft announced its Series C funding.

Since I didn't really need the extra cash at the time, I took a gamble and decided to go with the extra options. I figured if SalesLoft took off, I could get a nice little bonus. If not, I would be out maybe $10,000 in the worst case.

I stayed at SalesLoft for a year to make sure I vested at least some options. At the one-year mark, I promptly left for a higher-paying position. The $X salary component of my compensation was quite low. I had just transitioned from electrical engineering to software engineering, so it was the best I could do with so little professional software engineering experience.

After I left SalesLoft, I exercised all 3750 of my stock options at a price of $0.85 each.

In SalesLoft's most recent round of funding, all former SalesLoft employees are being forced to sell our shares. Now that I have an actual dollar value for my shares, I can calculate if I made the right decision or not.

Analysis of option #1: $5,000

Had I taken the higher salary, I would have invested any extra salary in VFIAX, the Vanguard 500 Index Fund. I also would have invested the money I'd otherwise have used to exercise any additional SalesLoft options.

I'll simplify things and use 2019-08-15 as the starting point for this analysis even though my salary would have been spread out over the course of the year.

With the higher salary and fewer stock options, I'd have $6,593.75 to invest in VFIAX. This comes from the extra $5,000 in salary and the $1,593.75 I'd save from not having to exercise an additional 1875 stock options.

VFIAX was $263.41 on 2019-08-15 and was $436.03 on 2021-12-23 for a gain of 65.5%. My $6,593.75 would have grown to $10,914.82.

Analysis of option #2: 1875 shares

The option I took gave me an additional 1875 shares to work with. Since I already accounted for the price of exercising these options in the previous section, I do not have to account for it in this section. I can treat the options as if they have an exercise price of $0.

I had to sell my shares for $12.55 each. Multiplying that out by 1875 shares gives a total of $23,531.25.

Summary

I got lucky. By choosing the equity-focused compensation package, I earned an extra $12,616.43.

Photo by Caleb Jones



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