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> The thought process is that if hypothetically, an employee has to move home to live with their family or they’re getting married to a childhood sweetheart acr

by serge2k 10y ago

> The thought process is that if hypothetically, an employee has to move home to live with their family or they’re getting married to a childhood sweetheart across the country, these are all things that are great decisions that should not be punished Unless you have only been at the company only 2 years 11 months. Then you have earned nothing. Don't let the door hit you on the way out. > My perspective is that backloaded vesting would be closer to the probable intended effect here (a barrier to leaving early, but you don't lose everything). Why is the approach of a cliff followed by getting a small amount of your stock every month afterwards not sufficient?

abalone 10y ago
> Why is the approach of a cliff followed by getting a small amount of your stock every month afterwards not sufficient? I think it is. My point is either a longer cliff or backloaded vesting would be a more transparent replacement for "90 day exercise window for X years, 10 year window after that". What you may not realize is that under the 90 day exercise window term, you don't actually "get" a small amount of stock every month. But that's exactly what most people think happens. In truth, you may lose it all. It is clearer to say "vesting = you get it", and then spell out the vesting terms clearly and directly. If you think people should actually be able to walk with 20%-25% of their grant after 1 year, like what their vesting schedule implies, then cool. If you think people should actually stay longer than that like what the 90 day rule kind of enforces as a side effect, then ok, no judgement, but make it transparent. Call it a multi-year cliff or a 10/20/30/40 vesting schedule, whatever clearly states the expectations. But "vesting" should always mean "you get it".
- hkmurakami 10y ago
  Well if you vest, then you do "get it". But you vest options, which is not shares. You "get" the option to buy shares in the company at $X strike price. The confusion seems to lie more in ISOs vs RSUs (or just plain equity, which is what most people have exposure to via the public market), rather than what "vesting" means. The problem is that vesting to most will inaccurately imply "getting" something they are not.
  - teej 10y ago
    A major difference between a 3 month window and a 10 month window is that with the former, you "get" to purchase lottery tickets. With the latter you have massively reduced downside risk.
  - abalone 10y ago
    You are arguing technical details when the issue is one of exploiting laypeoples' misunderstanding of technical details. It's not about confusing options for shares. It's confusion about how the 90 day window works. It is not at all obvious that the tax consequences may be many times greater than the strike price, resulting in you losing your vested options. This has been a surprise for many otherwise smart people. If you replaced it with more transparent terms, such as a "cliff that goes all the way to the IPO" or a heavily backloaded vesting schedule, I'd say most would consider it a below-market offer, even though it's roughly comparable. That's a reflection of the opacity and poor understanding of the standard terms.

by serge2k 10y ago

abalone 10y ago

> Why is the approach of a cliff followed by getting a small amount of your stock every month afterwards not sufficient? I think it is. My point is either a longer cliff or backloaded vesting would be a more transparent replacement for "90 day exercise window for X years, 10 year window after that". What you may not realize is that under the 90 day exercise window term, you don't actually "get" a small amount of stock every month. But that's exactly what most people think happens. In truth, you may lose it all. It is clearer to say "vesting = you get it", and then spell out the vesting terms clearly and directly. If you think people should actually be able to walk with 20%-25% of their grant after 1 year, like what their vesting schedule implies, then cool. If you think people should actually stay longer than that like what the 90 day rule kind of enforces as a side effect, then ok, no judgement, but make it transparent. Call it a multi-year cliff or a 10/20/30/40 vesting schedule, whatever clearly states the expectations. But "vesting" should always mean "you get it".

hkmurakami 10y ago
Well if you vest, then you do "get it". But you vest options, which is not shares. You "get" the option to buy shares in the company at $X strike price. The confusion seems to lie more in ISOs vs RSUs (or just plain equity, which is what most people have exposure to via the public market), rather than what "vesting" means. The problem is that vesting to most will inaccurately imply "getting" something they are not.
- teej 10y ago
  A major difference between a 3 month window and a 10 month window is that with the former, you "get" to purchase lottery tickets. With the latter you have massively reduced downside risk.
- abalone 10y ago
  You are arguing technical details when the issue is one of exploiting laypeoples' misunderstanding of technical details. It's not about confusing options for shares. It's confusion about how the 90 day window works. It is not at all obvious that the tax consequences may be many times greater than the strike price, resulting in you losing your vested options. This has been a surprise for many otherwise smart people. If you replaced it with more transparent terms, such as a "cliff that goes all the way to the IPO" or a heavily backloaded vesting schedule, I'd say most would consider it a below-market offer, even though it's roughly comparable. That's a reflection of the opacity and poor understanding of the standard terms.