Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. Jeff Sutton led the corporate IT team at Box for four years, as the online file-sharing company grew from 50 employees to more than 1, But Sutton, subject to an employee lockup agreement, had to wait days before he could cash out. Sutton knows it worked out just fine.

The frustrated expectations of early employees like Sutton have become a common thread in the latest round of technology IPOs. Now they can be among the few left behind. Many executives, early investors, and even later investors are able to cash out before the rank and file, or bargain for guarantees that help ensure a bonanza.

In an era when multibillion-dollar private valuations have almost become the norm in tech, employee stock options may appear more valuable than ever.

Square, the mobile payment company, maintained a website with an internal stock ticker before its IPO, showing the estimated price steadily rising with each new private investment. Whatever happens with an IPO, executives tend to hang on to enough equity to guarantee huge payouts when they sell their shares.

Big IPO, Tiny Payout for Many Startup Workers - Bloomberg

Late-stage investors in both Box and Square had such so-called ratchet agreements in place, further devaluing locked-up employee equity. Box and Square declined to comment for this story.

Jawbone declined to comment. Luckily he found a mentor who helped him shift to venture capital when Bowstreet crumbled. Again, none of this means startup workers are poor, even without accounting for the catered meals, free laundry, lavish parties, and other perks in their playground offices.

Less than a year later, after disagreements with his co-founders, he left that company, too.

If You’re Planning to Exercise Your Pre-IPO Employee Stock Options, Do It ASAP

When companies fail to meet expectations as they go public, options-holding employees bear much of the brunt. Bloomberg Anywhere Remote Login Software Updates Manage Contracts and Orders. Facebook Twitter LinkedIn Instagram.

About The Company Bloomberg London. Global Startups Bloomberg Technology TV Gadgets With Gurman Digital Defense Studio 1.

Shares vs Stock Options | Mike Volker – Vancouver's Green Angel and Tech Innovator

Latest Issue Debrief Podcast Subscribe. Climate Changed Video Series: Ventures Graphics Billionaires Game Plan Small Business Personal Finance Inspire GO The David Rubenstein Show Sponsored Content. Big IPO, Tiny Payout for Many Startup Workers Side deals and volatile shares make stock options a bigger gamble for startup employees.

Sarah Frier sarahfrier More stories by Sarah Frier.

Adam Satariano satariano More stories by Adam Satariano. The most important business stories of the day. Get Bloomberg's daily newsletter. Corrects spelling of Chris Zaharias in the seventh paragraph. Before it's here, it's on the Bloomberg Terminal. Careers Made in NYC Advertise Ad Choices Website Feedback Help.