Should I accept stock options in exchange for salary?
I received an offer letter with with the option to convert part of the salary to stock options as per the below table. Base salary is ₪33K/month (Israeli Shekel). Be aware of ‘₪’ vs ‘$’ in some columns. As of this writing the exchange rate is 1$ = 3.7₪.
|Salary Deduction||Run-Rate Value||Number of Options||%||Value at $3.45B|
Additionally the letter states:
Based on current run-rate, price per share is $2,675.
Exercise price will be at 90% discount of the last (at the time of signing) round price. If you are an American citizen, exercise price will be according to 409a valuation (~$800 per-share).
End of Offer Details
I would appreciate any help in understanding this information. What I’m mainly confused about is:
- Does “Run-Rate Value” mean current value or something else?
- Does “Exercise price will be at 90% discount” mean I pay 90% or 10%?
- Does “the last (at the time of signing) round price” refer to the $2,675/share stated above?
- What is the significance of the 4th and 5th columns?
- Does it make sense to forfeit some salary continually and indefinitely, in exchange for a discount in stock? It seems to me, intuitively at least, that eventually the loss in salary deduction will outweigh the gain of discounted stock. I am an American citizen, what is a 409a valuation?
Thank you to anyone who can help me understand this.
Edit – RIP inbox. Sitting down now to read and respond to as many comments as I can.