What is the value of a stock option plan if it has no liquidity? Very little and that is why in this dry IPO period, companies like Facebook and LinkedIn are allowing employees to sell vested stock privately. As a tech entrepreneur and CEO of Fon I find this practice at odds with company management. Personally I would find it hard to be selling Fon stock at a valuation that is 2 to 3 times as high as the one that my own partner/employees are asking for to sell their shares. I guess there is such thing as a liquidity premium price but the premium now is enormous. In the case of Facebook employees are selling at 70% discount of what Microsoft paid for its stake. I find this situation pretty confusing and it should make us entrepreneurs think of how to reward people well enough salary wise that they have the patience to wait until the IPO market improves or the whole company is sold. My take is that all this works in favor of large corporations whose stock option plans are worth little but in theory provide more job stability than start ups. I say in theory because they are very stable until they go for massive layoffs.

Follow Martin Varsavsky on Twitter: twitter.com/martinvars

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Martín Alejandro Carmona Selva on August 6, 2008  · 

Martín,

I agree with you! But the issue is that lots of people are afraid that situation will be even worse and then, they are making what we call in Spanish “la profesía autocumplida” -the self-accomplished prophecy-.

I mean, if everyone starts selling their shares, shares will fall for sure, if everyone stops buying, well, crisis will deepen.

But, I know I’m not a blue collar struggling to make ends meet. But, I don’t think the people you’re talking about fall into that category either :)

So, my feeling is that we must stop the panic and get back to normal life…

Fredo on August 8, 2008  · 

Obviously if Facebook employees are selling at 70% discount of what Microsoft paid for its stake is because they know the real value of the company.

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