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Employee stock options (VSOP)

This page is maintained by Amira Salem

TL;DR: Learn about our compensation & perks we offer at Wonder

All employees should have an ownership stake in the company. Because it's a topic shrouded in mystery, here is an explanation of how our virtual stock options program works:

How most stock options program works

A VSOP plan is a legal construct that models the behaviour of a stock option plan, but adjusted to the German legal system. It goes as follows:

  • The company created a pool of virtual shares that corresponds to 10% of the overall shares of the company- These shares can be allotted to employees or freelancers.- In the case of a "liquidity event" (i.e. an exit or an IPO), you receive a cash payout that is linked to the share price in the sale -
  • From this cash payout the company subtracts the share price of the last round at the time you joined (the strike price). - Over the course of 4 years, the shares are "vested" (i.e. you earn your allotted shares). So to receive your full package, you need to stay for 4 years (that is the point of the whole thing)
  • There is 1-year "cliff" in the vesting schedule. In the first year, no shares are vested and in month 13, you immediately vest 1/4 of your shares. This is to ensure that people stay for a minimum of a year

How Wonder's stock options program works

The above was a description of the basic mechanics of stock option plans in general (and most plans work that way). Some additional points that we think are important to understand, or where we deviated from the market standard.

  • Our vesting schedule is monthly, so you vest 1/48 in each month after the first year. This is the most common model, and the more employee-friendly one, but some stock option plans have an annual schedule, which means if you leave after 29 months, you receive 24/48 rather than 29/48 of your allotment.
  • In the case of a liquidity event, employees only participate in the immediate proceeds of the sale. Often, 75-85% of the exit price is paid upfront, with another 15-25% being reserved for certain conditions being met within x years. This can go either way, shareholders are also sometimes subject to clawback clauses where they have to repay tax liabilities. Because the VSOP payments are a form of employee bonus, they are a liability on the balance sheet. When a company buys another company, they typically expect the company to be free of such obligations and therefore wants all VSOP plan liabilities to be paid out upfront. That is why employees benefit only in the immediate proceeds and not the ones tied to performance metrics 3 years later. Again, this is fairly standard, but it can lead to confusion when, for example, the press writes about a 500m exit and the VSOP payout corresponds to 80% of that.
  • There is no expiration date and no reverse vesting. The majority of stock option plans expire at some point (typically 10-15 years), which means that you lose your shares if there is no exit within a certain period. We decided against it, as we thought it was unfair towards our team.
  • There is no "Bad Leaver" for voluntary departure or for ordinary firings, only for "Fristlose Kündigung". A "Bad Leaver" is a case where the employee loses all vested shares, so even if they stayed for 2,5 years, they do not get to keep their shares. Some stock option plans classify a voluntary departure as a "Bad Leaver", meaning that if you choose to leave the company after 2,5 years, you lose your shares. Many stock option plans classify a firing as a "Bad Leaver", so if the company asks you to leave after 2,5 years, you lose your shares. We decided against this, because we think it's unfair towards the team. The only "Bad Leaver" clause we have is the bare minimum one in the case of a fristlose Kündigung (reserved for things like theft, fraud, sexual harassment, etc.). This is a basic protective measure that all companies have.
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You will learn more about our VSOP during the

and
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Onboarding
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Want to educate yourself on ESOP/VSOP? Head over to Index Ventures who have created a great handbook