Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

DoorDash removing 1-year cliff for equity grants

blog.doordash.com

Post reply on HN
Print view View original

11–20 of 283 posts

Re: DoorDash removing 1-year cliff for equity grants

#11

Post by borski »

hn_throwaway_99 wrote: post #7
adoxyz wrote: post #2

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.

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 s…

(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.

Re: DoorDash removing 1-year cliff for equity grants

#12

Post by ram_rar »

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.

Re: DoorDash removing 1-year cliff for equity grants

#14

Post by dabfiend19 »

r00fus wrote: post #9
carkmorwin wrote: post #4

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-...

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…

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.

Re: DoorDash removing 1-year cliff for equity grants

#15

Post by echelon »

adoxyz wrote: post #2

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.

> 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.

Re: DoorDash removing 1-year cliff for equity grants

#16

Post by jdavis703 »

londons_explore wrote: post #3

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.

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.

Re: DoorDash removing 1-year cliff for equity grants

#17

Post by TechBro8615 »

tyingq wrote: post #5
adoxyz wrote: post #2

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.

Seems like a pro employer move too. Less people hanging around that have already decided to leave...just waiting on a vesting cliff.

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).

Re: DoorDash removing 1-year cliff for equity grants

#18

Post by potatolicious »

ram_rar wrote: post #12

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…

> 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.

Re: DoorDash removing 1-year cliff for equity grants

#20

Post by jahabrewer »

ram_rar wrote: post #12

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…

> you're missing out on stock growth

Is that necessarily true?

Post reply on HN