6 ms·

> When push comes to shove a company will never show you loyalty beyond what makes economic sense and what is legally necessary I disagree. Privately owned & p

> When push comes to shove a company will never show you loyalty beyond what makes economic sense and what is legally necessary I disagree. Privately owned & profitable companies have plenty of leeway to practice loyalty to their employees beyond what is economical and legal. Even in the unprofitable tech startup world, if it was all about the money, you'd see people getting laid off right before their vesting cliffs, but that doesn't happen, which is to some degree an expression of good will.

verall 4y ago
It's also technically illegal and although extremely difficult to prove doing it as a policy probably doesn't make strict economic sense when you factor it litigation and reputational risk.
encryptluks2 4y ago
Are vesting cliffs and similar benefits protected by ERISA or other laws. I'd imagine they mostly don't do it due to the legal repercussions.
- zmmmmm 4y ago
  it would quickly ruin the point of offering them if it became widely perceived the company could not be trusted to follow through, so I guess it is self limiting in the end.
naniwaduni 4y ago
The fact that people routinely fail to see obvious deleterious repercussions of their actions doesn't mean that they fail to see all obvious deleterious repercussions of their actions. If you routinely lay people off before their vesting cliffs, you'd have to pay them more up-front (also you would probably get into legal trouble). Penny-pinchers are very keen on not paying people more up-front (including paying more lawyers). The fact that people routinely miss implications that seem just as obvious that this one does not oblige them not to notice this one.
- SQueeeeeL 4y ago
  Being a good ethical person/organization who rewards loyalty and doesn't treat people like shit is astonishingly profitable. You just can't teach that shit in 2 years tho, so instead they just teach optimization problems
  - nsonha 4y ago
    > ethical person/organization who rewards loyalty what does loyalty have anything to do with ethic? Like being loyal is right and not being loyal is wrong?
  - TomSwirly 4y ago
    Bad people like gang bosses also reward loyalty.
    - killingtime74 4y ago
      And they are very successful since they get people to die for them for less than minimum wage
- icedchai 4y ago
  It's probably better for the company, cash-flow wise, to lay employees off after their vesting cliff. Some of them might exercise their options, using the severance you just paid them, reducing your total expenses. You can always increase the option pool in the next round (if there is one.)
  - moosedev 4y ago
    These days*, the equity component of most** offers takes the form of RSUs, not options, i.e. when the equity vests, you just get stock (public or private). *, ** For some definition of "these days" and "most", based on first-hand factual knowledge of the FAANGs (except Netflix with their special approach to comp), various "unicorns", and a long list of US-based companies modeling themselves on and/or aspiring to be the next FAANGs and unicorns.
mythhouse 4y ago
Not sure what the disagreement is. OP is pointing out the state of things in real world, not possibilities or if its right thing to do.
maxerickson 4y ago
Even if there weren't legal protections, screwing people over would erode the attractiveness of that form of compensation. Fool me once and all that.
cutenewt 4y ago
Same thing with these super generous severance packages. 3 months, 4 months... Companies in the US don't have to give any.
jackmott 4y ago
[dead]
philwelch 4y ago
If people were routinely laid off right before vesting cliffs, employees would just start devaluing any equity behind such a cliff. In general, how is an employee or prospective employee supposed to tell which companies are going to be loyal ahead of time? Private companies can choose to be loyal out of a sense of good will, just like employees can, but unless both parties have some credible reason to trust the other, it's just self-defeating to do so because then you're just volunteering to end up on the rough end of a cooperate/defect outcome.
deleted 4y ago
[deleted]
jameshush 4y ago
I've been laid off ~1 month before a vesting cliff before. Along with a few other early employees. Looking back (this was 10ish years ago when I was still a n00b), they had definitely given me too much equity based on my experience. If you don't grow as fast as the business grows, you will get booted. Even if you're a cofounder (one of the cofounders "left" about a year later too). Business is business, especially in America.
snovv_crash 4y ago
Which is why your contract should have protection against layoffs just before vesting cliffs so that companies don't have these incentives. From what I've seen, it's normal to have vest-immediately terms for anything except voluntary departure or at-fault termination.
vineyardmike 4y ago
> if it was all about the money, you'd see people getting laid off right before their vesting cliffs Except it sorta does. You can’t casually lay people off but companies absolutely optimize around payouts. Amazon, for example, famously had an average tenure of less than two years for outgoing employees, with a vesting schedule that heavily increased after 24 mo. Conversely, Google famous link doesn’t like to cull underperforming employees. They have a front-weighted vesting schedule so underperforming employees get an effective pay cut.

verall 4y ago

It's also technically illegal and although extremely difficult to prove doing it as a policy probably doesn't make strict economic sense when you factor it litigation and reputational risk.

encryptluks2 4y ago

Are vesting cliffs and similar benefits protected by ERISA or other laws. I'd imagine they mostly don't do it due to the legal repercussions.

zmmmmm 4y ago
it would quickly ruin the point of offering them if it became widely perceived the company could not be trusted to follow through, so I guess it is self limiting in the end.

naniwaduni 4y ago

The fact that people routinely fail to see obvious deleterious repercussions of their actions doesn't mean that they fail to see all obvious deleterious repercussions of their actions. If you routinely lay people off before their vesting cliffs, you'd have to pay them more up-front (also you would probably get into legal trouble). Penny-pinchers are very keen on not paying people more up-front (including paying more lawyers). The fact that people routinely miss implications that seem just as obvious that this one does not oblige them not to notice this one.

SQueeeeeL 4y ago
Being a good ethical person/organization who rewards loyalty and doesn't treat people like shit is astonishingly profitable. You just can't teach that shit in 2 years tho, so instead they just teach optimization problems
- nsonha 4y ago
  > ethical person/organization who rewards loyalty what does loyalty have anything to do with ethic? Like being loyal is right and not being loyal is wrong?
- TomSwirly 4y ago
  Bad people like gang bosses also reward loyalty.
  - killingtime74 4y ago
    And they are very successful since they get people to die for them for less than minimum wage
icedchai 4y ago
It's probably better for the company, cash-flow wise, to lay employees off after their vesting cliff. Some of them might exercise their options, using the severance you just paid them, reducing your total expenses. You can always increase the option pool in the next round (if there is one.)
- moosedev 4y ago
  These days*, the equity component of most** offers takes the form of RSUs, not options, i.e. when the equity vests, you just get stock (public or private). *, ** For some definition of "these days" and "most", based on first-hand factual knowledge of the FAANGs (except Netflix with their special approach to comp), various "unicorns", and a long list of US-based companies modeling themselves on and/or aspiring to be the next FAANGs and unicorns.

mythhouse 4y ago

Not sure what the disagreement is. OP is pointing out the state of things in real world, not possibilities or if its right thing to do.

maxerickson 4y ago

Even if there weren't legal protections, screwing people over would erode the attractiveness of that form of compensation. Fool me once and all that.

cutenewt 4y ago

Same thing with these super generous severance packages. 3 months, 4 months... Companies in the US don't have to give any.

jackmott 4y ago

[dead]

philwelch 4y ago

If people were routinely laid off right before vesting cliffs, employees would just start devaluing any equity behind such a cliff. In general, how is an employee or prospective employee supposed to tell which companies are going to be loyal ahead of time? Private companies can choose to be loyal out of a sense of good will, just like employees can, but unless both parties have some credible reason to trust the other, it's just self-defeating to do so because then you're just volunteering to end up on the rough end of a cooperate/defect outcome.

deleted 4y ago

[deleted]

jameshush 4y ago

I've been laid off ~1 month before a vesting cliff before. Along with a few other early employees. Looking back (this was 10ish years ago when I was still a n00b), they had definitely given me too much equity based on my experience. If you don't grow as fast as the business grows, you will get booted. Even if you're a cofounder (one of the cofounders "left" about a year later too). Business is business, especially in America.

snovv_crash 4y ago

Which is why your contract should have protection against layoffs just before vesting cliffs so that companies don't have these incentives. From what I've seen, it's normal to have vest-immediately terms for anything except voluntary departure or at-fault termination.

vineyardmike 4y ago

> if it was all about the money, you'd see people getting laid off right before their vesting cliffs Except it sorta does. You can’t casually lay people off but companies absolutely optimize around payouts. Amazon, for example, famously had an average tenure of less than two years for outgoing employees, with a vesting schedule that heavily increased after 24 mo. Conversely, Google famous link doesn’t like to cull underperforming employees. They have a front-weighted vesting schedule so underperforming employees get an effective pay cut.