Should I stay in my underpaid job and wait for the IPO, or quit?

Editor’s note: A version of this question originally appeared on Reddit.‍

I’ve been working at the same startup for 6 years and I’ve seen it grow into a company worth billions. I get stock options, and the company’s plan is to eventually IPO.

The team I work for is badly underpaid and there’s no realistic way to make more money or earn bigger bonuses under our current structure. I’ve been exploring other opportunities and I think I can get a 20- to 25 percent raise if I jump ship.

I hear stories about people making life-changing amounts of money from their stock options when their unicorn startup goes public. I’m in one of those opportunities right now, but I’m underpaid and unhappy and I’m wondering if it makes sense to stick it out and wait for the IPO, or quit for better pay.

Do you have any insight into what’s a realistic chance of going IPO, the type of money to expect, and whether it’s better to stick it out in a bad situation, or look for greener pastures?‍

- Anonymous‍

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Dear Anonymous,

Startup burnout is real, and it’s a feeling that’s only compounded by the knowledge that you’re being severely underpaid at your company.

You’re facing a tough decision. Do you stay at your unicorn startup and continue to vest stock options (while earning less than you’re worth in base pay) or jump ship to a new job that pays better, but may not have the same potential gains in stock options?

There are a couple things to consider here. First, what is the value of the stock options you’ve already vested, and how much will it cost to exercise those stock options if you were to leave?

If you got hired 6 years ago, you’ve likely fully vested your original stock option grant, and are currently vesting one or more refresh grants. If you’re earning incentive stock options (ISOs) or non-qualified stock options (NSOs), each individual grant will have a set strike price, so you can begin to calculate how much it will cost to exercise your vested stock options. For example:

• Original stock option grant: 5,000 ISOs at $1/each: $5,000
• Refresh #1: 1,000 ISOs vested (3,000 remaining) at $3/each: $3,000
• Refresh #2: 500 ISOs vested (3,500 remaining) at $5/each: $2,500
• Refresh #3: 100 ISOs vested (3,900 remaining) at $7/each: $700

In this example, it will cost you $11,200 to exercise your vested stock options, and once you do, you’ll hold 6,600 shares of your company, at a base cost of roughly $1.70 per share.

In your stock option administration platform — for example, Carta — look for your company’s 409A valuation (also known as fair market value), which will give you an estimate of the current value of your shares.

Depending on the type of stock options you’re vesting, you may owe taxes when you exercise. We’ve built a handy Stock Option Tax Calculator to help visualize your potential tax bill (check with your CPA or licensed financial professional, who can look at your entire financial picture).

By understanding your current costs to exercise your stock options, you can start to plan your possible exit.

At most startups, you’ll have 90 days to exercise your stock options once you leave the company. If you don’t exercise your options in that period, you might lose them entirely. It’s important to build a plan now for your stock options, so you aren’t surprised when it’s time to exercise them.

Still, the larger question remains: Should you continue to vest unicorn shares but remain unhappy and underpaid in your current job, or look for the next opportunity? Ultimately, that’s up to you to decide.

The good news is that there are a lot of promising startups out there, and you might find that the next opportunity holds just as much promise as your current employer, but with a better balance of work, life and compensation.

- Vieje Piauwasdy, Director of Equity Strategy, Secfi

Do you have a question about your stock options? Email us at ask@secfi.com