The cultural memory of stock options revolves around the Microsoft IPO, where in a pre-internet age, secretaries (which indicates how long ago it was) became millionaires via tiny slices of equity. The Google chef brought the misconception into the internet age.
Even at a billion dollar exit, 1% is borderline fuck you money after taxes.
Absolutely right, but, as I'm fond of pointing out to friends who join startups: you are not joining Google, Facebook, or Microsoft. The odds of you even joining Zillow or Yelp are so remote as to be a rounding error to a rounding error.
In fact, the Microsoft IPO was so long ago that it didn't even start out at a billion. The IPO valuation was $519 million.
But what really established the options mentality is that Microsoft grew another 1000-fold to the peak of the dot-com bubble. Someone who joined Microsoft before the 1986 IPO got rich. But so did someone who joined after the IPO. In fact, even someone who joined in 1995 would still get rich. That's why there were tens of thousands of Microsoft millionaires.
The other key difference is that Microsoft was mostly-bootstrapped. They did take investment, but not enough of it to significantly dilute the founders and employees. At the time of the IPO, Bill Gates owned 45% of Microsoft, Paul Allen owned 25%, and Steve Ballmer owned 7.5%.
It's very different today. You get tiny slices of equity, often junior to the VC investment. The company is more likely to be bought out for cash than to IPO. And when you're bought out by a larger company, your options are either cashed out or converted into options on the larger company. Those options are highly unlikely to grow another 1000-fold.
Well the 5 year share save for BT due next year will return about £60k (tax free) and I know there will be a lot of people taking redundancy after that.
It is when you have enough years in and with BT's redundancy terms you can max out your pension (ie if you worked any longer you would not get any more pension) get a huge tax free bung plus £60k ss on top.
Even at a billion dollar exit, 1% is borderline fuck you money after taxes.