It’s important to us that all PostHog employees can feel invested in the company’s success. Every one of us plays a critical role in the business and deserves a share in the companies success as we grow. When employees perform well, they contribute to the business doing well, and therefore should share a part of the increased financial value of the business.
As part of your compensation, you will receive share options in the company with a standard 1-year cliff, 4-year vest. Broadly, the amount of options will depend on your Level. We may change this policy from time to time depending on our rate of hiring - e.g. if we had a gap in hiring for an extended period, we would adjust this.
Whilst the terms of options for any company could vary if we were ever acquired, we have set them up with the following key terms:
- 10 years to exercise your options in the event that you leave PostHog
- Double trigger acceleration, which means if you are let go or forced to leave due to the company being acquired, you receive all of your options at that time
- Vesting starts from your start date (not after a "probation period" or similar)
- For UK-based team members, our options are part of the EMI share options scheme, which is tax-advantaged
It can take time to approve options, as it requires a board meeting and company valuation. We can clarify the likely time frame at the time we're hiring you. In any case, you will not be disadvantaged as vesting will always start from when you joined PostHog.
Frequently asked questions
We have written out a few of the most commonly asked questions about share options below. Some of these will be useful if this is your first time being granted share options, while others go into more detail.
What is a share option?
A share option gives you the option to buy a share of PostHog's stock at a set price agreed today, regardless of what the price is in the future.
These can be financially very lucrative, because PostHog will give you the opportunity to buy those shares at a massively discounted price when in the future they may be worth many times that. In the future, we hope that our share price will be much higher than this as we grow the value of the business.
What does it mean to 'exercise' a share option?
This simply means you decide to buy the shares at the price agreed in your option agreement. You should be careful here, as you may have personal tax implications in doing this. For this reason, most people only do this at the time of an exit event, i.e. sale to another company or going public.
What are my share options actually worth?
You can use this handy calculator to find out, as well as to model what they might be worth in the future. You'll need to make a copy first, and be signed in with your PostHog email address.
What if I leave PostHog before this exit event happens?
Luckily we have set up terms that are industry-leading in their friendliness to team members! If you leave PostHog, you will have until June 2031 to exercise them. This date applies to share options granted in June 2021 - in future, there will probably be different dates for different grants which we will list out here.
The industry standard is to only give you 90 days to exercise after leaving, which we think is bogus.
Does it make any difference how I leave PostHog - what if I am fired or made redundant?
Again, we have taken a very broad and team-friendly approach to what are called 'good leaver' and 'bad leaver' provisions:
- If you decide to leave, ie. resign, your share options stop vesting and you have until 2031 to exercise them. You are classified as a 'good leaver'.
- If unfortunately you are let go due to performance issues, you still keep your vested share options, and you have until 2031 to exercise them. You are classified as a 'good leaver'.
- Only in the unlikely event you are let go due to gross misconduct would you forfeit your share options. You are classified as a 'bad leaver'.
For context, the standard in a lot of startups is to class everyone as a bad leaver unless they basically died while working at the company.
We also have a special provision in place in case we are acquired by another company and, as a result, you are let go because your role is no longer required. In this case 'double trigger vesting' takes place, which means 100% of your shares immediately vest. This is usually only available to executives at most startups (if at all), but we thought it was fair that everyone should benefit from this.
What is 'vesting'?
Vesting means that you don't get all your shares up front, otherwise you could come and work at PostHog for a week, leave and still get a bunch of share options.
Instead we follow the standard industry vesting schedule over 4 years:
- After 1 year, 25% of your options vest
- In each subsequent month, 1/48th of your remaining share options vest
Vesting starts on the day that you started at PostHog, not the date that your share options were granted.
How did you decide the exercise price that I should pay on my share options?
PostHog doesn't decide the price - we get an external company to conduct a valuation and determine the 'fair market value' of the shares. Note that this is different (and lower) than simply the last funding round price, due to the way that it is calculated.
These valuations are usually only valid for 1 year (US) and 90 days (UK), so we have to redo them periodically.
Why do we allocate share options in batches?
Two reasons - because valuations (mentioned above) need to be re-run, and because each time we allocate share options we need to get them formally approved by the board.
As a result, it is normal for companies to do share option allocations 1-2 times per year.
Why don't you just give me the shares?
Under most countries' tax laws, including the US and UK, this would be considered income, and you would immediately have to pay income tax on the shares. This would mean you getting hit with a tax bill of tens/hundreds of thousands of $$$. Share options are a much more tax-efficient ways to compensate team members, as you don't pay tax today when you are granted the share options.
Can PostHog help me figure out what tax I will have to pay in the future though?
We can point you in the right direction, but we cannot give you personal tax advice - you need to talk to an accountant.
I received share options under the EMI plan as I'm based in the UK - how are these different from our regular share options?
The EMI plan has various additional tax benefits associated with it that we're able to offer because PostHog Inc. has a UK child company, Hiberly Ltd. Your shares are still held in PostHog Inc. even though you are employed by Hiberly Ltd.
You can find a simple guide to EMI here. It is worth noting that you will lose EMI tax benefits if you stop being a UK tax resident.
I have a question that is not covered here!
Ask Charles - ideally in a public Slack channel (if appropriate) for better visibility.
May I suggest a change to our share option plan or my share option document?
Unfortunately this isn't possible - we have a standard set of agreements that we use with everyone which have been previously signed off by the board and our investors. Making any changes would not be feasible, unless you spot an obvious error in your option agreement.
That being said, we do not include any terms that are not either completely standard or (in many cases) as team-friendly as humanly possible.