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Scheduled cash bonuses and multi-year stock vesting schedules are a great way to retain employees who don't want to work for you anymore. I have no clue why com

Scheduled cash bonuses and multi-year stock vesting schedules are a great way to retain employees who don't want to work for you anymore. I have no clue why companies think this is a good idea.

endtime 12y ago
s/Scheduled cash bonuses/Raises/ and I don't think you'd take the same critical tone. I work for Google, and a significant chunk of my comp is in stock. I was awarded an additional $N of stock over four years this year, and I just considered it a raise of $N/4.
- jonknee 12y ago
  Yes, the point being that if you started to hate your job there's a good chance you'd stick around to the next vesting period. The same happens with an annual bonus, no one wants to leave before the bonus checks come out. The Valley likes stock, Wall Street likes bonuses (funny in a way). Update: it also means you can stay at the job all year for the bonus/stock and then get laid off right before the end of the year. It's deplorable.
  - scottm01 12y ago
    Maybe Wall Street is made up of "grunts" who understand the value of cash and properly discounts the promise of paper profits later! That said, like earlier posters I can only budget around my base salary. I would of course prefer that "guaranteed" bonuses come in the form of base comp paid every check. If you want to incentivize me to create shareholder value and stick around; offer a generous ESPP.
    - tcoppi 12y ago
      Personally I wouldn't use an ESPP at all. You've already got your current job invested in the company, why would you want to put more eggs into that basket?
      - Iftheshoefits 12y ago
        Depends on the ESPP, no? The one ESPP I had was pretty nice: the shares were offered at a (double-digit, percentage wise) discount of the lowest share price at either the beginning or end of the purchase period. That effectively guaranteed a profit of at least the discount (more or less).
      - pcl 12y ago
        If you have the free cash to tie up in an ESPP, I generally think they are worth doing. They usually let you buy shares at a 15% or so discount of the lower of the price on the vesting date, or the price on the initial offer date. This is typically over either a 2-year or 6-month look-back period, although I've seen other time periods as well. Some programs even let you automate that automatic-sell rule. So... if you're playing it conservatively, you can just sell the shares on the day that they are granted to you, thus realizing a guaranteed 15% increase on whatever percentage of your salary you can put in the program. There is some risk that if the company goes bankrupt, you could lose the amount invested. But I'd guess that ESPP programs are pretty senior in the debt pool, and generally management doesn't want to piss off its employees any more then absolutely necessary during a bankruptcy proceeding.
  - encoderer 12y ago
    Options vest monthly. RSUs often vest quarterly. Very different IMO from a yearly lump sum, and sort of blunts your and GGP's argument here.
  - endtime 12y ago
    My vesting schedule is quarterly, at least for most of it. It wouldn't be a big deal to stick around an extra month or two to wait for that, if that was how I felt.
- ethanhunt_ 12y ago
  I'm more familiar with companies that have vesting schedules like: 10% per year for 3 years, then 70% in the final year. That's a great way to keep someone around for an extra couple years who doesn't want to be there. I agree with you that your example is a lot more similar to an $n/4 raise. It's kind of like a "resolution" of your pay. Ideally you get paid every day for the work you did that day. $N/4 reduces the resolution to every quarter. My example above reduces the resolution to every 4 years. Each one increases the length of time you're going to keep someone working for you that otherwise wouldn't be. As another reply mentioned, this can be a good thing. Keep around a talented person who you really need. My bet is that more often you're keeping around a talented person who isn't giving >100% (a passionate person will), and is probably poisonous to team morale too.
  - vonmoltke 12y ago
    > My bet is that more often you're keeping around a talented person who isn't giving >100% (a passionate person will) Perhaps, but an 85% effort from a known talented person may be better than trying to find someone who may not exist that will give you more. > and is probably poisonous to team morale too. Possibly, but high turnover can be poisonous as well. Plus, some problems just don't attract passionate people in the first place.
encoderer 12y ago
Because it also retains a lot of talented employees who are doing good work?
- deleted 12y ago
  [deleted]

Scheduled cash bonuses and multi-year stock vesting schedules are a great way to retain employees who don't want to work for you anymore. I have no clue why companies think this is a good idea.

endtime 12y ago

s/Scheduled cash bonuses/Raises/ and I don't think you'd take the same critical tone. I work for Google, and a significant chunk of my comp is in stock. I was awarded an additional $N of stock over four years this year, and I just considered it a raise of $N/4.

jonknee 12y ago
Yes, the point being that if you started to hate your job there's a good chance you'd stick around to the next vesting period. The same happens with an annual bonus, no one wants to leave before the bonus checks come out. The Valley likes stock, Wall Street likes bonuses (funny in a way). Update: it also means you can stay at the job all year for the bonus/stock and then get laid off right before the end of the year. It's deplorable.
- scottm01 12y ago
  Maybe Wall Street is made up of "grunts" who understand the value of cash and properly discounts the promise of paper profits later! That said, like earlier posters I can only budget around my base salary. I would of course prefer that "guaranteed" bonuses come in the form of base comp paid every check. If you want to incentivize me to create shareholder value and stick around; offer a generous ESPP.
  - tcoppi 12y ago
    Personally I wouldn't use an ESPP at all. You've already got your current job invested in the company, why would you want to put more eggs into that basket?
    - Iftheshoefits 12y ago
      Depends on the ESPP, no? The one ESPP I had was pretty nice: the shares were offered at a (double-digit, percentage wise) discount of the lowest share price at either the beginning or end of the purchase period. That effectively guaranteed a profit of at least the discount (more or less).
    - pcl 12y ago
      If you have the free cash to tie up in an ESPP, I generally think they are worth doing. They usually let you buy shares at a 15% or so discount of the lower of the price on the vesting date, or the price on the initial offer date. This is typically over either a 2-year or 6-month look-back period, although I've seen other time periods as well. Some programs even let you automate that automatic-sell rule. So... if you're playing it conservatively, you can just sell the shares on the day that they are granted to you, thus realizing a guaranteed 15% increase on whatever percentage of your salary you can put in the program. There is some risk that if the company goes bankrupt, you could lose the amount invested. But I'd guess that ESPP programs are pretty senior in the debt pool, and generally management doesn't want to piss off its employees any more then absolutely necessary during a bankruptcy proceeding.
- encoderer 12y ago
  Options vest monthly. RSUs often vest quarterly. Very different IMO from a yearly lump sum, and sort of blunts your and GGP's argument here.
- endtime 12y ago
  My vesting schedule is quarterly, at least for most of it. It wouldn't be a big deal to stick around an extra month or two to wait for that, if that was how I felt.
ethanhunt_ 12y ago
I'm more familiar with companies that have vesting schedules like: 10% per year for 3 years, then 70% in the final year. That's a great way to keep someone around for an extra couple years who doesn't want to be there. I agree with you that your example is a lot more similar to an $n/4 raise. It's kind of like a "resolution" of your pay. Ideally you get paid every day for the work you did that day. $N/4 reduces the resolution to every quarter. My example above reduces the resolution to every 4 years. Each one increases the length of time you're going to keep someone working for you that otherwise wouldn't be. As another reply mentioned, this can be a good thing. Keep around a talented person who you really need. My bet is that more often you're keeping around a talented person who isn't giving >100% (a passionate person will), and is probably poisonous to team morale too.
- vonmoltke 12y ago
  > My bet is that more often you're keeping around a talented person who isn't giving >100% (a passionate person will) Perhaps, but an 85% effort from a known talented person may be better than trying to find someone who may not exist that will give you more. > and is probably poisonous to team morale too. Possibly, but high turnover can be poisonous as well. Plus, some problems just don't attract passionate people in the first place.

encoderer 12y ago

Because it also retains a lot of talented employees who are doing good work?

deleted 12y ago
[deleted]