If you work at a rocket company, the stock options can be life-changing money. Just ask the folks at SpaceX, whose employees got to cash in when the company went public at an $86 billion valuation last month.
Blue Origin, Jeff Bezos's space venture, wants its 12,600 employees to feel that same kind of upside. The company's new equity initiative grants staff the chance to buy shares at $9.50, but anyone who leaves for a competing firm during the subsequent 18 months loses every option. Not just the ones that haven't vested yet - all of them.
The same 18-month window applies the other way too. If you leave and the company hasn't had an IPO or another big liquidity event by then, any options you have not yet exercised simply expire. So the clock is ticking two ways at once.
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This move did not come out of nowhere. Blue Origin has a retention problem.
SpaceX, its main rival, has been on a tear. The company just completed the largest IPO in the space industry, and its employees got to cash out options that had become extremely valuable. Meanwhile, Blue Origin workers watched their own previous stock options turn into nothing, which caused a lot of frustration.
The new plan is meant to stop that talent drain. By forcing people to think twice before leaving for a competitor, Blue Origin is basically saying: stay with us through the big payoff, or walk away with nothing.
The company has about 4,000 employees in Florida and another 1,600 in Alabama. Those are critical workers for a company that is trying to catch up to SpaceX's lead in the rocket business. And it is about to get a lot more interesting: Blue Origin is looking to raise $10 billion from outside investors for the first time, at a valuation of $130 billion.
If that fundraise succeeds, the new stock options could become very valuable. But the company has sole discretion over which funding rounds count as a liquidity event for option holders. So employees are betting not just on the company's success, but on the company's timing.
According to Mary Russell, a lawyer at Stock Option Counsel PC focusing on equity compensation for startups, companies now remain private for extended periods compared to the past, which increases the probability that staff will depart prior to a major liquidity event. She also noted that such non-compete forfeiture clauses are "very rare" among tech startups in the US.
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