At CNBC Make it In a recent article, a tech CEO tells the story of the sale of his company, which had a very positive financial impact for most employees many years ago.
The basis of the unexpected wealth resulting from the decision to sell were stock options that the employees received as part of the deal.
When it happened and which companies are involved: The case occurred about 25 years ago. At that time, CEO Jay Chaudry sold his company SecureIT to VeriSign, which is still in business today.
- Following the sale of SecureIT, VeriSign’s share price rose approximately 2,300 percent over the course of two years.
- As a result, more than 70 of the company’s 80 employees became millionaires on paper, Chaudry said.
- After the tech bubble burst, VeriSign’s share price fell significantly from the end of 2000. But a lot of patience would have paid off: Since 2019, the share price has been moving in similar areas to those after the first strong rise at the beginning of the 2000s.
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Interesting side note: The share price of Chaudry’s current company, Zscaler, is around $175, which is very similar to that of VeriSign.
How this deal became possible
Chaudry tells CNBC that the deal with the many stock options for his employees was only possible due to a certain circumstance:
Chaudry’s company, SecureIT, was founded and built with equity rather than with financial support from investors.
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Chaudry says he does not know whether or when his employees cashed in their shares. However, he can still clearly remember the moment when he realized the positive effects of the deal for his employees, as he told CNBC:
I went home that evening and looked at the spreadsheet with all the [Aktien-]options they had and multiplied it by VeriSign’s stock price. That’s when I realized that the math came out to about 70 or 80 millionaires with stock options.
The title of the CNBC article mentions at least 88 percent of employees. The company’s sales price at the time was 70 million US dollars.