[HN Gopher] DoorDash removing 1-year cliff for equity grants ___________________________________________________________________ DoorDash removing 1-year cliff for equity grants Author : matan_a Score : 116 points Date : 2021-07-07 20:29 UTC (2 hours ago) (HTM) web link (blog.doordash.com) (TXT) w3m dump (blog.doordash.com) | carkmorwin wrote: | Does DoorDash also grant RSUs based on fixed bonus amount and not | number of shares? It's hard to believe this would be pro- | employee. | | https://www.teamblind.com/post/Lets-Boycott-Interviewing-at-... | r00fus wrote: | I think it's common in the industry to see RSU grants shown as | say, "$50k" - but that's $50k in stock as of the grant time. | Once the grant is finalized, the value of the RSU grant grows | with the stock. ie, if the stock is $100, then it's the same as | 500 share grant. | | This Blind post is saying that Instacart/Stripe says you only | get $50k no matter the price of stock? How would you even | structure that kind of grant? Why not just make it a bonus? | dabfiend19 wrote: | all of my friends at google say the grant is in dollars and | stays in dollars at google. at the end of the quarter you get | a variable number of shares based on current stock price. | While this reduces upside, it also reduces downside. | ericjang wrote: | Googler here. dabfiend19 is correct, around ~2019 I believe | new L3 hires were switched to this new grant schedule. | Prior to that, it was based on a fixed number of shares. | [deleted] | z0r wrote: | you have misunderstood your friends, or your friends have | misunderstood their grants | potatolicious wrote: | I've been at Google fairly recently, that's not how it | works. | | Your offer states that you will get $X of shares, vesting | over 4 years. The $X is converted to a number of shares | shortly after joining, based on market price, and is locked | in from that point forward. | | Your friends are mistaken. | QuercusMax wrote: | This is correct. I believe the share-price they pick is | something like the average daily share price for the next | full month after you join. So if you join Jan 28, the $$ | value of your stock grant will be evaluated around March | 1 to determine your grant-price, and then you'll get your | first vested shares monthly (around the 25th, I think?). | | I believe they used to due quarterly vesting for folks | who didn't get much equity, but now that you can have | vesting of fractional shares, ~everybody should be on a | monthly vesting schedule. | nostrademons wrote: | Wasn't true when I was (re-)hired a year ago. Grant is in | dollars, it's converted to shares based on the share price | when you start, and then you that fixed number of shares | divided by the number of vesting periods over the term of | the grant. The vesting period depends on how big the grant | is; low-level employees will likely vest quarterly, | mid/high-level monthly. No cliff; they removed it a couple | years ago. | Rebelgecko wrote: | Your friends might be getting mixed up with annual | refresher grants. Except for some rounding of fractional | shares, your initial grant will vest the same # of shares | every month for 48 months | dabfiend19 wrote: | I work at a smaller company, and here we convert the $ price | to a number of shares by taking the 100 day VWAP of the stock | from the date of the board meeting where your grant is | approved. | devoutsalsa wrote: | I had to google it... | | VWAP == Volume Weighted Average Price | | https://www.investopedia.com/terms/v/vwap.asp | r00fus wrote: | I stand corrected, however, shares are fixed at time of | grant is my point. | flatiron wrote: | Either we work at the same place or that's very common. | | When I joined I got a random email that said "your rsu $ to | shares conversion was X shares and here's your schedule" | and my schedule is all in # of shares not $ | B-Con wrote: | This is very common. It's basically the point of paying | in RSUs and not in fixed dollars, to give employees | incentive to care about the company/stock performance. | echelon wrote: | Yes, but then they take that calculation to grant you a set | number of shares (ISOs, RSUs, etc.) that doesn't change. | The value of your award grows with the growth of the | company. | | ESPP-like programs, on the other hand, are always dollar | denominated and exchanged at a set rate at the end of the | offering period. | xutopia wrote: | Because that 50k isn't necessarily exercised immediately and | means that you are potentially going to benefit from a rising | stock price. | bradlys wrote: | It's number of shares based on when you joined. It is the | original format as 1-yr cliff but now you just get your stock | faster. | almost_usual wrote: | I was expecting a catch with the equity grant period shortening | but it seems it's still four years? If so this is great for | employees. | shaohua wrote: | awesome | bww wrote: | > Because we see equity as part of total compensation, we believe | employees should receive equity as it's earned -- every quarter. | | This reads to me like someone looked at the data and discovered | that almost everybody who stays employed for a quarter goes on to | stay for a year. So they decided to try to juice some marketing | value out of a policy change that makes no functional difference | to anyone. | | Why else would they choose to have equity vest quarterly instead | of with each pay period? Or monthly, which is already typical | after the cliff? If you believe equity is part of total | compensation why does it need a different schedule at all? | novok wrote: | TBH I'd feel jittery working at door dash. COVID is going to end | completely soon and the boom in deliveries is going to drop with | it, probably along with their stock price. If was to go work | there, I could start selling every month. | | But they also don't give you units of RSUs as stock comp, just | cash equivalents, so that is another major downside working | there. | ekzy wrote: | Covid might have created some habits in people, not sure the | deliveries are gonna drop that much | mupuff1234 wrote: | Have any of these food delivery companies actually reached | profitablity? | | What's the endgame? | Animats wrote: | This does not, of course, include the people who actually do the | deliveries. | sergiotapia wrote: | of course, they are not employees | justaguy88 wrote: | This is great! | | Allows bad-fits to leave asap rather than hanging around till 366 | days | ram_rar wrote: | Depending on how you look at it. This is good for employees who | dont have to wait till the cliff. But on the other hand, if your | RSUs are based on a fixed amount (which I believe is the case for | all the new hires in DD) and not no of units, then you're missing | out on stock growth. Since the compensation is capping the upside | of stock. | | Overall, this is not bad for a company that has already IPOed. I | hope the startups that are on the verge of the IPO dont use this | as a way to cap out giving RSUs to employees. | potatolicious wrote: | > if your RSUs are based on a fixed amount (which I believe is | the case for all the new hires in DD) and not no of units | | That's quite surprising. Generally RSU comp is based on a | particular monetary amount, but converted to no. of units upon | issuance based on market prices (usually at/close to start | date). Is this not the case with DoorDash? | | If that's the case that seems... awful? That's a cash bonus | with a downside. | jypepin wrote: | What I've seen is generally the conversion happens once for | the whole package, when you sign. So if the stock grows | during your vesting period, the value increases (goes both | way obviously). | | I think here they are mentioning value based, which means | that instead of being given X amount of shares/rsu over 4 | years, you're given "the equivalent of $X" at the begining of | each years. So after 1 year, of the stock doubled in price, | you will effectively receive half the amount of stocks (still | the same $ value tho). | nostrademons wrote: | That's typical, but I've heard of a move away from it, to a | plan where you get a set dollar amount every month(?) and | it's converted to employee shares at the market rate then. | Sounds like DoorDash just moved to it, and someone has | linked a Blind thread where apparently Stripe/Instacart | have, and I heard from a friend that Lyft just moved to | that as well. | | I can see the importance of this from the company end - | with tech company shares skyrocketing, a fixed share amount | gives them potentially unlimited stock compensation | liabilities which could drag on earnings. But from an | employee perspective, it sucks. You get none of the upside | of company stock appreciation but all of the downside of | being forced to purchase company stock with a portion of | your compensation. You're much better off taking higher | cash compensation and using that to purchase the stock of | hot tech companies on the open market. | potatolicious wrote: | Agreed, this seems deeply negative for the employee. It's | not semantically different than just being paid a cash | bonus, except you are forced to buy company stock with | said cash bonus. | | Which I suppose you can just immediately sell and get | back the cash - which begs the question of why not just | model this as cash bonus compensation entirely? | | The entire attraction of equity is that it can appreciate | as it vests - that your (presumed) contribution to the | company's market cap during your tenure is rewarded. | pm90 wrote: | If I was looking at offers I would just not accept this | nonsense. Not only are you compensating employees less, | you remove the feeling of shared ownership that comes | with stock grants, which is a powerful motivator. | almost_usual wrote: | > That's typical, but I've heard of a move away from it, | to a plan where you get a set dollar amount every | month(?) and it's converted to employee shares at the | market rate then. Sounds like DoorDash just moved to it, | and someone has linked a Blind thread where apparently | Stripe/Instacart have, and I heard from a friend that | Lyft just moved to that as well. | | Wow that sucks | potatolicious wrote: | Boy if that's true that's a real bummer. That's not very | different than just getting a cash bonus. | | The entire point is to encourage people to stay by letting | their wealth grow with the company? A scheme like that | seems wildly counterproductive. | jahabrewer wrote: | > you're missing out on stock growth | | Is that necessarily true? | ram_rar wrote: | yes, have been lucky enough to exit 2 IPOs including DD. When | there are hockey stick growths during pre-IPOs, you miss out | on a lot of $$ on the table. | m-ee wrote: | I don't see how this change would make that worse, could you | explain? | mulligan wrote: | it means you are vesting (and paying taxes) every quarter, so | you won't see growth on that pre-tax amount | [deleted] | darthvader101 wrote: | hope more companies adopt this practice | DebtDeflation wrote: | Not surprised. I'm probably a fair bit older than the average HN | reader (finished undergrad in 1995). This is the hottest job | market I've seen since the height of the dotcom bubble (mid 1999 | to early 2000), and if it continues along it's current trajectory | it will pass that by year end. | marktangotango wrote: | > This is the hottest job market I've seen | | Clearly this is anecdotal, but what types of things lead you to | this conclusion? | arnvald wrote: | I live in EU and there are a few things that have changed: | | - tons of remote offers, even with technologies like Java | where in the past very few offers were remote | | - salaries significantly up compared to 1-2y ago (getting | 90-100k eur for a remote position in EU was rare, now it's | not surprising to see such numbers) | | - companies shorten interview processes, both in terms of | numbers of rounds but also the time the whole process takes. | In the past companies could reply to your application after a | week, now I saw a few cases where a week after applying they | send an offer | dpaleka wrote: | Is it really? | | I'm graduating soon, but recruiters haven't started reaching | out yet. But in a normal year, I suppose they would: | | https://danielpaleka.com/docs/cv-daniel-paleka.pdf | digianarchist wrote: | Browsing /r/cscareerquestions it looks like entry level folks | are having a hard time breaking into the industry. Employers | are mostly recruiting senior levels it seems. | milofeynman wrote: | I think this is a problem across the industry. Companies | don't want to give engineers adequate raises so they get | trained as juniors and walk out and get 20-30k raises. So | then everyone is only interested in seniors. | | Senior has all but lost its meaning too... It describes how | long you've been in the industry, not if you have the skills | to be a technical leader, etc. | | At larger corps when a senior leaves, you're often given | budget to re-hire a senior, so there is no incentive to hire | a junior/entry level. A lot of companies don't even have | pathways from internships to entry-level positions. They just | let them finish their internship and say "good luck" | | This is a problem for diversity as well. Look at the makeup | of the seniors in the industry. Now look at the junior/entry | level folks coming out of master programs, colleges and boot | camps. | pm90 wrote: | I don't think it's a question of raises, more like they're | just not willing to invest the time. | | Most non giant companies don't have good processes for on | boarding engineers so it's mostly yolo. They want engineers | to be productive very quickly. Someone just out of college | will likely not have the skills required to drive projects | on their own to completion without help/supervision. | | Bigger companies have pretty great onboarding tools and | processes and dev tools that abstract most complex things | away, allowing developers to become productive rapidly. I | think of them as factories that can extract the most value | out of new grads. | | I say this as someone who was a junior not that long ago, | but of course my experience is anecdotal so take it with a | pinch of salt. | mason55 wrote: | Yeah I always see this expressed as a criticism, like "oh | these small companies just hate junior devs! Everyone | wants to hire a senior dev, no one wants to hire a junior | dev and train them!" | | But it's not always that easy. If you're a small company | still looking for product-market fit or doing a fair bit | of greenfield development, there's just not much work for | a junior dev to do. These companies aren't all stupid or | lazy or discriminating against new grads for some reason. | | It's the same reason estimates are hard - we're building | brand new things that we've never built before and a lot | of the work is in the design. Junior devs need to be told | what to do. The architects/senior devs become a huge | bottleneck because they can only design so much stuff at | once, so until you can find more of them you can't hire | more junior devs because there's not going to be anything | for them to do. Until you get to a point where you're | doing repeatable work or your design/architecture is | solidified enough to keep people on the guard rails, | there's just not a ton of work for a junior dev to do. | | Finally, you also have the issue that a lot of devs don't | want to get into any kind of management but they want to | be managed by technical people. You end up with a | shortage of decent managers (where "decent" means both | someone who's ok at the job of management and is | acceptable to the team). | | If we had more work to give to junior devs we'd happily | hire them - they are so much cheaper! | | And one other contributing factor is a lack of unions. | Say what you will about seniority-based comp/perks, they | do make people stay in one job for longer, which makes it | more worthwhile to invest in a junior dev. | paxys wrote: | I know many new college grads who got offers from multiple | tier-1 and tier-2 silicon valley software companies in the | same range as what I got as a senior engineer with 8 years of | experience a few years ago. I'm talking base salary | $160K-$180K, $300K equity grant, 10% annual bonus, sign on | bonus, relocation...the works. | | Not to say that everyone can simply walk in to these jobs | (and they shouldn't!), but if a graduating CS major cannot | find _any_ decent software job today I 'd be more inclined to | suspect their skills than the industry itself. | deregulateMed wrote: | Is it really "the works" if you have to move to SV? | | I'm profiting 100k/yr in the Midwest, and it's a junior-ish | position. | | Could be worse, could be Tesla 90k/yr revenue. | Alex3917 wrote: | > Employers are mostly recruiting senior levels it seems. | | Because no one is going to hire a junior developer to work | remote. The job market isn't especially hot, it's just | temporarily distorted in a way that favors more experienced | developers. | MattGaiser wrote: | Eh, even as someone with 1.8 years experience (at least I | still feel very junior) I get a steady flood of recruiters | and can easily get a pile of interviews. | | I think it's that if you have zero experience, you are a | huge unknown. Anything more and work abounds. | MattGaiser wrote: | There are a surprising number of people who graduate CS/CE | without writing any meaningful amount of code. | | To me a decent junior should be able to build a basic Hacker | News. | | There are a lot out there who have never done so much as make | a web page with more than copy/pasted Jquery and expect to | get jobs. | deregulateMed wrote: | I've seen these people get a job in testing and never | leave... Or they move to a program management position. | | On the flip side, self taught coders can do pretty much | anything with bad form. Although even at my job I find | myself doing things with bad form unless the task requires | it to be written well. | MattGaiser wrote: | This is one of my concerns about myself. | | I have never really had the opportunity to work with | experienced developers for a long period of time (at | least not experienced with the work I was doing) so for | all I knew I am doing all sorts of things with bad form. | fridif wrote: | >"To me a decent junior should be able to build a basic | Hacker News" | | In what time period? With what features? With what non | functional requirements? Show me a senior who can! | | I have a better test for evaluating anyone's skills: | | Write a function that puts Strings in an array. Then write | another function that goes searching for a string in an | array. | | Write a unit test to confirm your code is working. Explain | what happens to the performance of our code if we can | guarantee our array is sorted. | | If they can past this test, you're already better than most | candidates in my eyes, and it takes about 10 mins to find | out. | MattGaiser wrote: | I would be satisfied with anything approaching a forum, | with wide flexibility in specific features. | | If you know enough about a web framework to get it going, | use it to complete a specific set of tasks, and get it | deployed with a database, it would put you ahead of a | heck of a lot of grads that I know. | | I wasn't suggesting this as an interview question, but | more a self check for juniors. Can you actually bring | something end to end? Yours works better in an interview | setting, although it seems fairly trivial. | bogota wrote: | Yes unfortunately almost all US and likely other computer | science degrees are geared largely at making you a good | researcher. I was lucky in that i loved playing with some | home servers and with that led to figuring out how to build | my own software before finishing school. I think college | does a very bad job of preparing you for the real world use | such as most having people turn in zip files and not even | using git (maybe this has changed). | MattGaiser wrote: | I graduated two years ago. We learned subversion :) | dahfizz wrote: | I think there is a bit of a selection bias going on in that | subreddit. | | I finished undergrad last May and had multiple offers to | choose from well before I even graduated. Maybe covid has | slowed hiring since, though. | antiterra wrote: | New grad jobs are often a completely different pool from | the rest of the roles, so that doesn't necessarily | conflict. | rejectedandsad wrote: | I only had 4 offers to choose from. It's a bimodal | distribution between the 200K+ 0YOE folks and everyone | else. | smabie wrote: | 4 is a lot | skeeter2020 wrote: | >> I only had 4 offers to choose from | | I busted ass to get a single job; how is "only" 4 offers | not amazing? | whimsicalism wrote: | Eh, I talk to a fair number of undergrads and I think it | has been tough this past year. | jshen wrote: | Something is off then. Are they in big cities? Do they | not know where/how to apply? We've had a hard time hiring | anyone, including entry level. | whimsicalism wrote: | I mean, what sort of compensation are you offering? | | Also - I'm talking about last year, not now. | | But I am recently out of college and have not even passed | resume screen by a few companies despite referral, | credentials, etc. | jshen wrote: | We're not a big tech company, so comp isn't quite what it | is at Amazon, FB, etc. but, it's solid. 100k+ salary, | annual grant of restricted stock units, good health and | other benefits etc. | | Having said that, there's a contradiction in claiming | that college grads can't find jobs while suggesting that | a company offering six figures can't find people because | of comp. | whimsicalism wrote: | > while suggesting that a company offering six figures | can't find people because of comp. | | Never said that - but if you had answered $50k, I | probably would have! | | I'm surprised you are having trouble hiring people - but | perhaps if you are in the Bay and hiring new grads, they | might be surprised when it is in the low $100ks. | zo1 wrote: | Are you offering remote? That might be a big factor that | could influence things at this point in time. | bboylen wrote: | What city are you in, if I may ask? | jshen wrote: | We offices in several cities. LA, Seattle, and more. | akomtu wrote: | Have you adjusted your pay for inflation? The rent prices | have nearly doubled in ten years, so if you offer 100k | today, it's like offering 60k in 2011. | jshen wrote: | Starting salaries were around 75-80k ten years ago. | Again, there's a contradiction in the claim that college | grads in comp sci can't find jobs, and the suggestion you | are making. | tshaddox wrote: | I suspect that is no more the case than it has always been. | While the overall job market demand might be very high now, I | doubt that the _proportions_ of demand for entry-level and | senior roles has changed significantly. | bboylen wrote: | As a self taught guy transitioning from chemical engineering, | I hope its not too hard. Starting my search in a couple | months | oehtXRwMkIs wrote: | Doing something similar, good luck. Can't tell if it's very | difficult or very easy. | bboylen wrote: | I don't think it is super easy. I think it is doable | though | deregulateMed wrote: | I did this. | | Engineering was more rewarding than software, but software | pays better. | | I do engineering in my personal projects now. | fallmonkey wrote: | With Google doing front loading(33/33/22/11) and other companies | also shifting away from conventional 25% per year vesting to make | first few years more attractive, they gotta catch up to stay | competitive. Uber recently did the same of removing cliff. | breck wrote: | Do you have a link for Uber dropping the cliff? I didn't know | they did that. | B-Con wrote: | Source on Google doing front loading? | thebean11 wrote: | I don't have a link, but seen this on Blind quite a bit | thebean11 wrote: | Ehh, aren't the front loaded grants smaller in total? I don't | see front loading as a good thing necessarily. | bentlegen wrote: | The article seems to intentionally obscure whether the previous | vesting period was quarterly or not. | | My cynical read of this is that they are changing the vesting | schedule to quarterly (instead of monthly, which is more | typical), and burying the lede on that by painting this as a | benefit to employees (when it really only impacts new employees). | | Does anyone know if this is true or not? | fshbbdssbbgdd wrote: | I've seen quarterly vesting much more often than monthly in | offers from several different companies over the years. | mynameisvlad wrote: | > instead of monthly, which is more typical | | Is it? Almost all my and my friends' RSUs have been quarterly, | with a typically 1 year cliff as described in the article. | piercebot wrote: | Typically, there's a "cliff" after the first year, at which | point it switches to quarterly. | | So you get nothing the first three quarters, but after quarter | 4 (your first year at the company), 25% of your 4-year grant is | immediately vested. Every quarter after that is another 6.25% | of your initial grant. | | I believe the point they were trying to make in the article is | that, instead of quarterly grants following the pattern of: | [0%, 0%, 0%, 25%, 6.25%, 6.25%, ...] | | It would instead follow the pattern: [6.25%, | 6.25%, 6.25%, 6.25%, 6.25%, ...] | | ``` | [deleted] | soheil wrote: | It looks like DoorDash just put up a big banner at their front | door saying if you want to stay less than a year and still get | paid highly apply here. | | Wouldn't this move incentivize employees seeking short term | employment thus diluting stocks given out to existing long term | employees? | ralph84 wrote: | People who are only staying because of vesting tend not to be | the most productive. Better for everyone to have someone who's | not working out or doesn't want to be there leave after a | quarter instead of dragging it out for a year. | paxys wrote: | The number of people looking for full-time jobs and intending | to only work for 3-9 months is way less than you think. | bradlys wrote: | People who find out the company is a bad fit. It is _very_ | common within the valley for people to leave just after they | 're 1-yr vest because it was a bad fit. If you can get this | bad fit employee out faster, the better. | soheil wrote: | The world is a dynamic place. If you think this won't have a | large impact on the number of people job hopping not sure | what you think will. | nostrademons wrote: | I think they do this to keep bad hires from sticking around | until the cliff. | | It takes _a lot_ to fire someone legally - oftentimes you have | to document ~6 months of poor performance, put them on a PIP, | give them a chance to remediate, etc. Combine that with normal | long ramp-up times in a tech company, and by the time you know | it 's not working out and can fire them, they're pretty close | or past the 1 year vesting point anyway. It's much more | efficient if the employee decides to leave on the their own, if | they _know_ it 's a mutual bad fit. | | This removes the incentive to stick around for the windfall - | if you're not enjoying your workplace, go leave and find a | better one, and you get paid fully for time served. It's a lot | like the buyout offers at places like Zappos or Coinbase, | designed to make sure that everyone is on-board with the | existing company culture. | soheil wrote: | I get the point about unhappy employees sticking around just | for their cliff to vest, but what about attracting a new | breed of employees looking for short term employment? | nostrademons wrote: | That's already a risk in tech, because wages are so high | but ramp-up times are pretty long. | | They get weeded out relatively quickly and usually run out | of desirable employers, though. That's why employers are | skeptical of employees with multiple short-duration stints | or gaps on their resume. | soheil wrote: | So if they do get weeded out quickly then why would any | rational employee even care about not having a cliff when | looking for a new job to begin with? | | This is simply increasing the risk of hiring short term | employees in addition to existing risks including the | high cost of ramp-up times. | skzrskzr wrote: | Facebook has had the same policy for a while and didn't run | into that problem. It's more about getting talent in the door | and keeping current with market. | adoxyz wrote: | Good, pro-employee move. | | Next, I'd like to see pre-IPO startups offer longer periods to | exercise shares when you leave. 90 days being standard is way too | low. | tyingq wrote: | Seems like a pro employer move too. Less people hanging around | that have already decided to leave...just waiting on a vesting | cliff. | TechBro8615 wrote: | Or you get a bunch of ex employees you fired after three | months lingering around on the cap table (assuming you're not | a public company). | hn_throwaway_99 wrote: | I totally agree with the above, and have commented on it many | times before, but note the 90 day standard is because that is | the maximum amount of time allowed for ISOs by the IRS. To | allow for conversion after that time (e.g. 5-10 years seems to | be what a lot of people are pushing for), the ISOs convert into | non-qualified options. Still worth it in my opinion. Even | better would be for the IRS to change the law (not sure if it's | a law or a reg), because with companies staying private so much | longer it's a different world. | borski wrote: | (Preface: IANAL) | | Only worth it if you aren't early. ISOs provide preferential | tax treatment, and early on are usually very very cheap, so | many companies (mine included) also offer early exercise with | ISOs, which is an unbeatable tax win (afaik). | | The issue occurs when options get expensive (aka the company | is doing well) and then you have to do the math between ISOs | or NSOs. The longer expiration _may_ be better, but certainly | not for every employee. | | That said, as companies get bigger they stop being able to | offer as many ISOs (there is a max cap), so at that point | they should extend the timeline for expiration. | | One thing companies do have to worry about though: a 10-year | expiration means your cap table is in flux for 10 years, | potentially, which makes calculations, acquisitions, etc, | tougher. | fishtoaster wrote: | Wouldn't that only be an issue if a company offers NSOs | _instead_ of ISOs? What I 've seen in the past is "here's | some ISOs, they automatically convert to NSOs 90 days after | you leave." That way you get all the benefits of an ISO | (tax on sale) while you work there, then all the benefits | of an NSO (doesn't disappear in a puff of smoke at day 90). | Seems like strictly a win, regardless of company phase. | jkaplowitz wrote: | Several startups have already amended their plans to allow | expanded post-termination exercise windows. The impression I | get, although I'm not a tax/legal/financial professional, is | that the options remain ISOs all the way through the first 90 | days of the exercise window and only then convert to non- | qualified options. | [deleted] | devoutsalsa wrote: | Is there any real incentive to offer more favorable terms to | employees that plan to leave? | pm90 wrote: | In this case they would be leaving with a smaller fraction of | their stock grant and would allow the company to hire someone | who would _want_ the job sooner. Seems like a win-win. | woah wrote: | Offering more favorable terms means being able to hire better | employees | echelon wrote: | > Next, I'd like to see pre-IPO startups offer longer periods | to exercise shares when you leave. 90 days being standard is | way too low. | | It should be at least 365 days so that you can split it between | tax years. | | I've still got options of a public company I need to "dispose" | of, and I don't want to do it all at once. | | Perhaps until the options expire (typically 10 years) would be | too much to wish for, but that would be ideal. | alasdair_ wrote: | Niantic offers 10 years to exercise as an NSO and has done so | for almost six years now. | jkaplowitz wrote: | My employer (not yet reflected in my profile and I'm not | speaking for them here) made this change last year for every | employee with at least 2 years tenure. For such employees, the | post-termination exercise window equals the years of service up | to a maximum of 4 years. I've heard similar things at a handful | of other well-known tech startups. | londons_explore wrote: | The 1 year cliff never really made sense... | | It effectively gave the company a discount on employees who | stayed only 364 days - or to look at it another way, a 'trial | period' of 1 year where the pay was substantially less. | jdavis703 wrote: | It helps keep the cap table small. After more than 2000 | shareholders the company must register with and report | information to the SEC. This is both a costly and time- | consuming process. | KallDrexx wrote: | Not only that, Door Dash might still have an effective 1 year | cliff anyway. | | Usually signing bonuses have a 1 year paypack period. So sure, | you may get stock even if you leave before a year, but you | still have to pay back the signon bonus you received (and you | don't get the taxes you paid on the sign-on bonus back either) | RussianCow wrote: | Am I the only one that doesn't see that as unreasonable? It's | not like you aren't accruing equity during that time; you still | get the full year's worth of options at the 365 day mark. And | the ramp-up time with new engineers can be so long that the | first year isn't nearly as productive as consecutive ones. | | A buddy of mine who worked at a giant company (not strictly | tech but you'd recognize it) said he heard from his boss that | the company effectively considers the first year of a software | engineer's employment a wash as far as cost/benefit. I can't | imagine they're the only ones. In that case, why would you | reward people who jump ship before your break-even point? | breck wrote: | I think the larger the company the longer it takes to ramp | up, but at a small startup you can have a big impact in month | one. | | I've always found the one year cliff funny, since _investors_ | don 't have a cliff. | | I've been hoping startups would start doing this for a while, | and think DD is really a pioneer here and think this will | become a trend. I know personally I turned down a few | opportunities at promising startups simply because I was | young, in my twenties, and a year felt like a long time. I | found the probability of a life changing event that would | require me to move and leave a company too high, and didn't | want to bust my butt for 10 months with a salary cut, then | have to leave and get no equity. So I said "no" to a few | opportunities that otherwise would have been great. | | Currently incentives first your first year are to focus on | not getting fired. Now it can be on making an impact. | RussianCow wrote: | > I know personally I turned down a few opportunities at | promising startups simply because I was young, in my | twenties, and a year felt like a long time. I found the | probability of a life changing event that would require me | to move and leave a company too high, and didn't want to | bust my butt for 10 months with a salary cut, then have to | leave and get no equity. So I said "no" to a few | opportunities that otherwise would have been great. | | I'm curious: Did you try to negotiate? I have had luck | negotiating the terms of equity in the past, but I'm not | sure if my experience generalizes. | | > Currently incentives first your first year are to focus | on not getting fired. Now it can be on making an impact. | | If someone is so unmotivated at a job that they're not | making an impact, I don't know if removing the cliff would | help; they likely shouldn't have taken the job in the first | place. If you join a new place and realize that it's a poor | fit, it's usually best to cut your losses and move | elsewhere immediately, even if your equity hasn't vested. | The presence of a cliff doesn't significantly change that | math. | | I agree about missing out on hires because of the cliff, I | just don't think it's that unreasonable to have one. | Beaver117 wrote: | Reward? They only join in the first place because of the | expected total compensation. | RussianCow wrote: | But it's not like the one year cliff is a hidden detail | that you don't find out until you join; employees have all | the information up front. If you choose to take the job | anyway, you know that your compensation will be lower if | you leave within the first 365 days, so if you still choose | to leave, that's on you. | pm90 wrote: | I think we need to consider each company separately. | | Smaller firms may have smaller codebase and less complex | infrastructure and processes to get familiar with. Learning | all of that wouldn't take more than a week or a month, tops. | | Larger, public companies like FAANGS will often have | completely custom stacks, specialized developer tools and a | ton of checks before anything you write hits production. | Learning to navigate this will take a lot longer. IIRC | Facebook has a bootcamp of several weeks (months?) just to | get new engineers familiar with their shit. | | In either case, I personally don't think it's a "wash" since | even at the bigger company it's not like you're not doing | anything and once you get familiar with the stack you can be | productive af. | RussianCow wrote: | You're completely right--to be fair, the company I was | referring to is giant and likely has several months' worth | of things to learn, which is very different than joining a | startup. But even if a one-year cliff seems excessive for | most companies, I still don't think there's anything wrong | with a cliff of some sort. Maybe 6 months makes more sense | for a medium-sized company, but there's still a breakeven | point for new hires, and unless you're one of the first 5 | or so employees, that point is probably somewhere between 3 | and 9 months. I don't think it's unreasonable for companies | to want to pay less during that "trial" period; if you | don't like it, join a different company, or just hold out | until your equity vests. | hrpnk wrote: | A cliff forces one to consider decisions with a different time | horizon and tends to avoid short-term thinking (e.g. attempt to | tune financial results ahead of a certain quarterly report). | | Sometimes, companies include in their annual reports the | conditions of employee shareholding plans. In Europe, for | management, plans with 1 year vesting and 1-3 years blocking | period is a practice. This means that you cannot exercise the | options until 2-4 years in. Further, all unexercised options | are forfeited if the employee moves to the competition within a | defined timeframe. | jkaplowitz wrote: | Having been fired once at the 10-month mark early in my | career, not for misconduct and not after any prior | performance warnings, the 1-year cliff can be heavily abused | by employers. Your argument assumes the employee has the | control over when they leave, which isn't always true. | | (In actual fact I was then a pretty underperforming employee | who misunderstood the situation, but the apparent trigger for | me getting fired was my own request for help addressing the | situation since I realized something was wrong. The startup | founders were as early-career as me and didn't really know | how to give me the feedback I needed. My next employer did | give me the necessary constructive criticism, after which I | made the necessary changes, got subsequent positive feedback | from that same employer, and have been a decent to good | employee everywhere I've been since then.) | tengbretson wrote: | Depending on the amount/cost of onboarding it's very possible | that an employee that only stays for 364 days is a net drain on | resources. | khazhoux wrote: | LOL contrast this with Uber's offers in 2016: | | Standard vesting schedule with 1-year cliff... but you would be | prevented from selling any stock grant for the first year after | it vests. Love it, thank you but no! ___________________________________________________________________ (page generated 2021-07-07 23:00 UTC)