May 3, 2023
Dozens of peoples joined us this morning at the Amit, Pollak, Matalon & Co. house for the “Employee Options in Stormy Waters” event that dealt with the consequences of the crisis in the high-tech sector with regard to options and employee compensation, hosted by our firm’s Hi Tech & Venture Capital department and our Tax department. Adv. Yoav Etzyon, Managing Partner at Amit, Pollak, Matalon and Co-Head of the High Tech department, moderated the event.
The distribution of options is one of the best and most common instruments or means of compensation in the high-tech sector. There are a number of types of alternative capital means of compensation for giving options and taxation considerations connected to granting options. Over the years, numerous employees became wealthy due to exercising options (in cases of an exit or issuance); however, in a declining market and when there are rounds of lay-offs, companies and employees need to reconsider and seriously deal with the various economic consequences.
Racheli Guz-Lavi, Managing Partner and Partner at APM & Co. Tax department, referred to the hidden damage to employee options in a declining market and spoke, among other things, about the possible options for reducing this harm. “In the current market, there are different ways to compensate employees whose options are not cash, by using capital instruments. One of those is the option of cancelling the current options and reissuing options with a lower exercise price (repricing). Another option is to cancel the current options and grant Restricted Stock Units (RSUs) instead of the cancelled options, which is what Wix did for its employees. This is the right to hold company shares which mature and become a share within a predetermined period of time. Maturity is what gives the employee the ability to sell the share and receive the money.”
Thank you to all the fantastic speakers – Adv. (CPA) Racheli Guz-Lavi, Adv. (CPA) Zvika Bernstein, a founding partner of IBI Capital, Amit Zelinger, VP and general counsel to Guesty, and Adi Zentner, legal counsel to Equitybee for sharing your knowledge and experience.
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