Advice | My company stock options are worthless

Anyone employed by my company for a year is granted a certain number of stock options as a “bonus.” In informal conversation, one of my supervisors estimated our stock options would be worth somewhere north of $500,000 if we went public or were acquired.A few weeks ago, we learned that all of the company’s patents, licenses, and other intellectual property had been sold off. The officers of the company all resigned after taking large severance checks. The company will be utterly worthless soon.

I know it’s not right, but was this even legal? Several of us have considered legal action. Do I jump ship now and give up?It was a time of screechy dial-up internet and flip phones, when investors were throwing funds at any start-up with “dot com” in its name. Stock options were a common hiring incentive, and if you happened to exercise those options and maybe sell the stock at the right time, you had it made.

Then around the turn-of-the-century, the bubble burst. Start-ups sputtered, and the stock options employees hoped would make them millionaires instead became millstones. When a company’s stock bottomed out, employees who had exercised their options lost their investment, some ending up with huge tax bills they couldn’t afford even though they never saw a dime of stock money.

The point of that vignette is, those of us who watched this happen the first time are wary of stock-based compensation packages, but a new generation of workers is having to learn it the hard way. Stock options offer employees a chance to gamble on the company’s success, but not everyone walks away richer. In the Great Silicon Rush, “for all the people that made it, there were 100 that didn’t,” says Robert Ellerbrock, a partner at FisherBroyles specializing in benefits law.

No, it’s not right or good that leadership cashed out and left employees holding a soon-to-be-empty bag. But, says, Ellerbrock, “whoever has the majority of equity will do what’s best for shareholders” and for the company overall. Sometimes that means liquidating assets and cutting losses.

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