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How often do startups actually claw back equity? The handful of stock plans I've seen only interrupt vesting when the employee maintains the absence of any int
by chasb 12y ago
How often do startups actually claw back equity?
The handful of stock plans I've seen only interrupt vesting when the employee maintains the absence of any interruption or termination of service as an employee. Do companies take the legal position that a demotion is an "interruption"? Or are there other status termination clauses that are more strict in wide use?
I would not be surprised if the frequency of such stricter clauses inversely correlates with startup quality. At a good startup, you're trying to hire great people away from a lot of other amazing options. You need to foster trust that you're going to support them. And that means making an organizational commitment to them as a person, not just a title. I'm not sure why other employees wouldn't understand that.
Not trying to be critical of Ben here, he obviously knows way more and has seen much more than me.
- boucher 12y agoAlthough I have no first hand or even second hand experience here, there are somewhat widely reported stories of companies saying "accept this demotion as well as a reduction in your stock options, or be fired," to which there's obviously some incentive for an employee to voluntarily accept the reduction.