The annual bonus is a lot more likely than a liquidity event for your stock options in your pre-IPO startup. Think of it this way: would you rather get a 5-6 f

The annual bonus is a lot more likely than a liquidity event for your stock options in your pre-IPO startup. Think of it this way: would you rather get a 5-6 figure bonus most years, or a 6-7 figure stock option liquidity event in 3-7 years with a 95% probably of zero and you don't find out until after the 3-7 years have passed? Fundamentally, they serve the same purpose, to tie compensation to company performance. But banks still expect to be around 50 years from now and earn profits the whole time, startups expect to take a big gamble on growth and then cash out in a big event and sort of change form. If you're a VC the latter is a pretty good deal because you only have to pay LT capital gains tax, not ordinary income; and obviously you're able to de-risk through diversification, unlike employees. The bonus structure in banks is there so they can set salaries to be more like a percent of the company's revenue that year, except people refuse to accept salary decreases so they have to call it something else. If you compare it to pre-IPO stock options, it seems like it could be a lot less risky from the point of view of the employee.