6 ms·

What specifically is wrong with a comp model of one-year vesting (instead of 4-year) and no cliff? Whether it's better or worse for employees depends on how the

by om2 5y ago

What specifically is wrong with a comp model of one-year vesting (instead of 4-year) and no cliff? Whether it's better or worse for employees depends on how they size the grant and in general is very situational. If the company goes up in value a lot over 4 years, then yeah, the employee may lose out, even if grants are comparable in dollar terms at time of grant. If the company has more volatility than growth, or only modest growth expected, then annual grants with one year vesting are likely better. It definitely does not seem as obviously evil as backlighted vesting or underspecified stock offers. Is there a more subtle problem?

chris11 5y ago
> If the company goes up in value a lot over 4 years, then yeah, the employee may lose out This is horrible at pre-IPO unicorns like Stripe. One year vesting could cost normal employees millions if the company blows up. Sure, the stock might not move much, or it can go down. A temporary dip means good performers are more likely to get larger refreshers to get tc up to market rate. And if pay is your driving motivation you can switch to a new job.
- alecbz 5y ago
  Stripe's last round was at like $100B. There's some growth being missed out on, sure, but I'm not sure for how many people that's gonna net out to be millions.
  - bradlys 5y ago
    It could be a lot. 100B makes a lot of millionaires. Even at 10B, lots of millionaires are created unless all hires were made at high valuation. I was getting 1m/yr at 5B and I wasn’t even that early of an employee or high up. Expand that same company to 100B? Everyone would be getting millions out of it - even the lowest ranking employees.
    - alecbz 5y ago
      ? My point is that $100B is very high and Stripe's unlikely to see insane future growth. For the people who joined at $10B, yes, 10x their equity could be millions for them. But I think it's a lot less likely that Stripe will make it to $1T soon, so people joining now are unlikely to 10x.
alecbz 5y ago
I think the idea is that the size of the grants remains roughly the same (or, you know, it's 1/4 of the size but lasts only 1 year). You're right that if they increased it, you could see that as just doing a bit of a risk trade-off. But my impression is that they aren't? And so it's just a comp decrease (albeit a more minor one the more stable the company's stock is). Of all things in the equity world this certainly doesn't seem especially evil, but what I can't stand is the half-hearted framings of this as good for employees. If you're deciding you want to keep more equity for yourselves, fucking say so.

by om2 5y ago

chris11 5y ago

> If the company goes up in value a lot over 4 years, then yeah, the employee may lose out This is horrible at pre-IPO unicorns like Stripe. One year vesting could cost normal employees millions if the company blows up. Sure, the stock might not move much, or it can go down. A temporary dip means good performers are more likely to get larger refreshers to get tc up to market rate. And if pay is your driving motivation you can switch to a new job.

alecbz 5y ago
Stripe's last round was at like $100B. There's some growth being missed out on, sure, but I'm not sure for how many people that's gonna net out to be millions.
- bradlys 5y ago
  It could be a lot. 100B makes a lot of millionaires. Even at 10B, lots of millionaires are created unless all hires were made at high valuation. I was getting 1m/yr at 5B and I wasn’t even that early of an employee or high up. Expand that same company to 100B? Everyone would be getting millions out of it - even the lowest ranking employees.
  - alecbz 5y ago
    ? My point is that $100B is very high and Stripe's unlikely to see insane future growth. For the people who joined at $10B, yes, 10x their equity could be millions for them. But I think it's a lot less likely that Stripe will make it to $1T soon, so people joining now are unlikely to 10x.

alecbz 5y ago

I think the idea is that the size of the grants remains roughly the same (or, you know, it's 1/4 of the size but lasts only 1 year). You're right that if they increased it, you could see that as just doing a bit of a risk trade-off. But my impression is that they aren't? And so it's just a comp decrease (albeit a more minor one the more stable the company's stock is). Of all things in the equity world this certainly doesn't seem especially evil, but what I can't stand is the half-hearted framings of this as good for employees. If you're deciding you want to keep more equity for yourselves, fucking say so.