IPOs, especially successful ones like Pinterest, can make instant millionaires out of early employees, but they can also be the demarcation point for a new kind of workplace. There is a culture shift with a focus on shareholder concerns.
Ben Silbermann became a very rich man on April 18 when Pinterest began trading as a public company on Wall Street, but the co-founder and CEO of the virtual pinboard could have been significantly richer. On Monday it was estimated that he is now worth $1.6 billion. The company's valuation on Tuesday reached near-$14 billion in trading.
In Silbermann's case, he received 31.2 million options in 2013, but based on Pinterest's S-1, they remain unexercised. Had he exercised them when the opportunity arose, they likely would have been eligible for long-term capital gains. Now he'll face short-term capital-gain taxes that could be as high as 45%.
IPOs, especially successful ones like Pinterest, can make instant millionaires out of early employees and garner profitable new opportunities for a company, but they can also bring about decisive changes in the workplace. "[Any company with a successful IPO] does carry the challenge of being part of a public company," said Snider."There's more scrutiny. The public gets more information, but employees often get less, because senior management has to make sure there's no information provided to employees that can leak out and affect the company."
As for Pinterest, the day one results were encouraging. It will, of course, be months before we see if that market optimism is sustained. Employees are hoping so for several reasons, but largely because they want the stock to be high when their lockout period expires.
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