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EP305 · Economy · first published 2025-02-12

Millionaire by Options, Not Inheritance | Riku Asikainen | Negotiator 305

Riku Asikainen of Evli Growth Partners — also chair of the Finnish Venture Capital Association — and Sami Miettinen work through why employee options disappeared from Finland and what that has cost growth companies. An option is taxed as earned income on the day it is exercised, so five years of appreciation lands in a single day at the top marginal rate. Asikainen's thesis has an unusual shape: because no option income arises at all today, moving to capital gains taxation cannot lose a single euro of revenue — you cannot lose from zero. The episode also covers the cap table and waterfall calculations, a buyer's bafflement at employer charges landing in an exit, Yrjö Kopra's employee share model, a recent Supreme Administrative Court ruling on swapping options for shares, and the fact that Elon Musk got rich on options rather than as a founder. It closes on a genuine disagreement about replacing inheritance tax with capital gains tax.

Sami Miettinen · Sections: AI and the Economy + AI and Society

Millionaire by Options, Not Inheritance | Riku Asikainen | Negotiator 305

Summary: Riku Asikainen of Evli Growth Partners — also chair of the Finnish Venture Capital Association — and Sami Miettinen work through why employee options disappeared from Finland and what that has cost growth companies. An option is taxed as earned income on the day it is exercised, so five years of appreciation lands in a single day at the top marginal rate. Asikainen’s thesis has an unusual shape: because no option income arises at all today, moving to capital gains taxation cannot lose a single euro of revenue — you cannot lose from zero. The episode also covers the cap table and waterfall calculations, a buyer’s bafflement at employer charges landing in an exit, Yrjö Kopra’s employee share model, a recent Supreme Administrative Court ruling on swapping options for shares, and the fact that Elon Musk got rich on options rather than as a founder. It closes on a genuine disagreement about replacing inheritance tax with capital gains tax.

A note on reading this

Both speakers are interested parties, and that is worth knowing before reading on.

Riku Asikainen runs the growth fund at Evli Growth Partners, has made some fifty angel investments, and chairs the board of the Finnish Venture Capital Association — so he represents an industry whose portfolio companies experience option taxation directly as a recruitment problem. Sami Miettinen is an investment banker who sits at the exit table and sees the consequences of option schemes on the purchase-agreement side; he also wrote his master’s thesis on the subject.

Both therefore have a stake in the outcome. That does not make the arguments bad — it means the argument and the interest are worth separating, which is what this article tries to do.

The episode was recorded in February 2025. Parts of it are predictions about legislation then in progress; those are marked as predictions and their outcome is not scored here.

1. What an option is, and why they vanished from Finland

The episode learns the basics before arguing about them, and that is worth following, because the whole argument follows from the mechanics.

An option is a right to buy — here, a share — at an agreed exercise price. If the exercise price is 50 euros and the share is at 100 when exercised, the difference is 50.

Finland had options, and they worked. Asikainen and Miettinen recall Nokia’s massive programme, Sampo’s employee option and Fortum’s package. Sampo’s was dividend-adjusted and available cheaply — in Miettinen’s words, it carried a clearly positive expected value. There was even a functioning secondary market: you could get a price for an option.

They did not disappear because they failed. Asikainen’s formulation is direct:

They were destroyed purely by taxing them.

Behind it is the Fortum option controversy and the political reaction that followed. Miettinen spent those thirteen years in London and watched from a distance; his reading of the era’s ethos is sharp and appears here as his reading: when somebody gets a bit too much, it has to be killed — and the instrument was found in taxation. The episode also notes that Fortum’s already-agreed options survived on the principle pacta sunt servanda.

2. The mechanics: five years in one day

This is the technical core, and it is short.

An option is not taxed when granted. Tax falls due when it is exercised and converted into a share: the difference between exercise price and market price is then earned income. The company additionally pays employer charges on it.

The problem is timing. An option programme is multi-year by construction, so the appreciation accrues across years — but is realised on a single day. The whole amount then lands in the top bracket. Asikainen puts that ceiling at about 59.2 per cent, and notes it is reached “at fairly small sums”.

People do try to optimise their taxes. The result is simply that the options never get exercised.

A checkable note. Finland’s top marginal rate on earned income is of this order once state and municipal taxes and the insured person’s contributions are combined; the exact figure depends on municipality and year. That a multi-year accrual is taxed inside one year’s progression is mechanically undisputed and does not depend on whether the ceiling is 57 or 59.

3. International hiring

Options work, in Asikainen’s account, specifically in fast-growing international companies — and that is exactly where Finland’s treatment shows up immediately.

An international hire for whom options are a normal part of the package elsewhere wants them here too. Then he calculates the tax. Asikainen argues this is not only a Finnish problem but a European one — and that is precisely why there is an opportunity:

As a growth measure this would make a lot of sense for Finland. We would stand out from the Europeans.

The second hiring angle is cash preservation. A growth company recruiting a CFO pays 250,000–300,000 euros a year out of its own equity — money raised for growth. The American model pays half in cash and half in options, leaving the present capital in the company.

4. “Not one euro is lost” — the shape of the argument

This is the intellectually interesting part, because the argument is not an ordinary tax-cut demand.

No tax revenue is lost if options start being taxed as capital income, because at the moment nothing is collected from them at all.

The structure is this: taxation has succeeded so completely that the base is zero. You cannot lose from zero. A rate change is therefore fiscally riskless in Asikainen’s account, and anything that arises is additional. He also states it as a general rule:

What you tax more, you get less of. What you tax insanely, you do not get at all.

How to read this. The argument holds if the base really is near zero and if the change does not convert other compensation into options. The second condition is not discussed in the episode, and it is the point a finance ministry typically raises: a shift from earned to capital income can re-tax work income currently paid as salary. Asikainen does not dispute it — he is simply not asked. Flagged here for that reason.

On implementation he makes a separate point that it is simple: since treating options as salary income is itself a statutory choice, they can be made capital income without touching the rest of the tax structure.

5. Cap table, waterfall, and the buyer’s bafflement

Here Miettinen’s investment-banking view contributes something rarely heard in a tax-policy debate: what options do at the deal table.

In international venture deals an option pool of about 10 per cent is conventional. In Finland they are rarer — and when they exist, the exit requires a waterfall calculation: the order in which the purchase price is distributed across instruments.

And then the moment that recurs in Miettinen’s experience:

The buyer pays employer charges on the seller’s exit? What kind of banana republic is this?

A foreign buyer does not expect a seller’s incentive scheme to generate employer social charges that land in the transaction. It comes as a surprise, and surprises get priced.

Both conclude this is not only a startup question. Asikainen extends it to listed company management and boards, and notes that if the word option is politically too heavy, the instrument can be given a plain Finnish name — a right to buy — because what matters is the mechanism, not the label.

6. Kopra’s model and the court’s ruling

The episode covers two partial fixes, and is critical of both.

The employee share model. Miettinen’s thesis client was Yrjö Kopra (Alexander Corporate Finance), and Kopra has appeared on Incentives for Employee Ownership | Negotiator 87 describing the employee share issue structure that permits a subscription price at, or even below, mathematical value.

Asikainen credits the work but not the model:

It is still really confusing. On what terms may you hand out this manna.

His reading of the complexity is suspicious and belongs to him: complexity benefits both the consultants and the tax authority, because room for interpretation remains. Hence he wants a clear rule rather than a complicated relief.

The 2025 ruling. Asikainen says a colleague sent him KPMG’s summary of a Supreme Administrative Court decision: a company that has already granted options may swap them into an employee share issue without penalty — without triggering employer charges and other consequences.

Two caveats the episode itself raises: the scope looked narrow, and the text indicated the arrangements must be clearly separate — the tax authority does not look kindly on options and a share issue being assembled into a logical exit pipeline.

A note on sourcing. The decision is discussed from a second-hand summary and the speakers say so. No case number is given and none has been added here. The subject is treated more closely in Inheritance tax, option taxation and due process in tax | Janne Juusela | Negotiator 395.

7. Why broad option pools feed the capital market

A short but structural observation, which Asikainen aims straight at the investment banker.

A fast-growing company with a broad option pool is closer to a listing than one without. The reason is mechanical: many option holders create a natural demand for liquidity — somebody wants out, and the shares need a market. Options are therefore not only compensation but the feeder pipe of the listing market.

And on what makes them an incentive rather than a payment:

They are completely worthless if there is no growth. You only get something from the upside.

8. Musk: rich on options, not as a founder

The episode’s most illustrative single example, and also a checkable one.

Asikainen and Miettinen work through the point that Elon Musk’s wealth is largely option-derived: he did not found Tesla but joined as an investor and then as CEO, and his compensation is share-based. The episode also refers to the Delaware proceedings in which the package was challenged.

A checkable note. That Tesla was founded before Musk joined, and that his wealth is substantially share-award derived, is publicly documented. The legal status of the package has moved since recording and is not assessed here. Miettinen’s aside about Trump being able to change the court is a flourish, not a claim.

As a sideline the pair jokingly nominate Kim Väisänen — Asikainen’s business partner — as “Finland’s DOGE man”, which is the episode’s lightest moment and needs no checking.

9. Inheritance tax: the real disagreement

Here the episode stops agreeing with itself, and that is its better half. It opens with Miettinen apologising publicly: he had characterised Asikainen’s position with a crude word in public while Asikainen was not there to answer, so he was invited into the studio to reply. That is worth recording, because it frames the whole exchange.

Asikainen’s position is that replacing inheritance tax with capital gains tax is a bad trade — and he argues it through capital allocation, not fiscally:

That change effectively protects passive wealth, while it hinders active wealth — the kind that can be bought, sold and allocated to the best possible place.

He adds that the nominal rate does not necessarily fall: capital gains tax on self-built wealth can be higher than inheritance tax, because the acquisition cost is near zero. He concedes the present system’s flaws — a minor inheriting and falling outside the relief, for instance — but considers them fixable by other means.

Miettinen’s position rests on Sweden and compounding. Sweden abolished inheritance tax in 2005; on his account the two countries’ average wealth was then roughly equal, and the gap is now large. He puts a figure of 700 billion euros on what Finland might otherwise have, and grounds it in the unbroken series: in Sweden the share “rolls” from one generation to the next, in Finland the series resets.

And then he does something worth noticing: he makes the counter-argument to his own figure.

Now you get the social democrat view from me. It is true that average wealth is much higher in Sweden — but, surprisingly: median wealth is the same. In Sweden the rich have got richer faster than Finland’s rich.

Asikainen does not take the easy win but returns to his own premise: the lock-in effect is harmful regardless of whose wealth grows, because the state should not be deciding on an investor’s behalf that a share is worth holding.

Neither gives way, and this article does not settle it. The disagreement is real and each man has both an argument and an interest in it.

Figures to check in this section. Sweden’s abolition of inheritance and gift tax in 2004–2005 is a fact. The claim about the size of the wealth gap, and the 700 billion figure in particular, are the speaker’s; a global wealth statistic is named as the source in the episode, and the median observation is the same speaker’s own qualification of his own figure. On the 3.8 per cent effect of succession relief the two disagree about how common it is. These are recorded here as claims.

10. What to take away

  1. A tax base can be zero, and that changes the shape of the argument. When nothing is collected, a rate change is not a cost but an option. It is an unusually clean example of how Laffer-type reasoning should be presented: not as ideology but as an observation of zero.
  2. The problem with options is not the level but the timing. A multi-year accrual inside one year’s progression is a structural error that no adjustment of the percentage fixes.
  3. Compensation shows up in the purchase agreement. The cap table, the waterfall and employer charges at exit are where a domestic tax quirk turns into a foreign buyer’s discount.
  4. Broad option pools are the listing market’s feeder pipe, not merely an employee benefit.
  5. A complicated relief does not substitute for a clear rule — and complexity has its defenders on both sides of the table.
  6. The best objection in the episode is made against the speaker’s own case. The median wealth observation weakens its own author’s 700-billion argument, and he offers it anyway.

Episode timeline

This article was written from the episode’s own Finnish subtitle track, uploaded by the channel (631 cues), and from the publisher’s own 36-item chapter list. The speakers’ claims are separated from checked facts, and uncertain figures are marked as claims. Nothing here is investment or tax advice.

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