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Golden Handcuffs

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Re: Golden Handcuffs

#191

Post by voidfunc »

amzn_throw wrote: post #171
voidfunc wrote: post #78

Earlier quoted context omitted.

I definitely know some people on the 10/10/40/40 Amazon comp plan... also seems to be a common tactic to PIP people just before year 3 vests. Fuck Amazon. I'll never work for them.

Who gives a f about the comp plan? I'm on 5/15/40/40. The first two years are cash with bonus and then the stock vests in lieu of the bonus. I am making $275k and the stock has gone up 40% since I joined. And yet, if I stay through vest, it's like a $25k raise (9%). Why would they be incentivized to PIP me? Plenty of people work here and get filthy rich. They stay because they create immense value at scale. Sounds li…

This is cute.

Re: Golden Handcuffs

#192

Post by ineedasername »

gkoberger wrote: post #41

This sounds employee-friendly, but it's total BS. You'll just be getting less equity at a higher strike price every year, so it's just a sneaky way for these companies to give employees less. They can still say "we're giving you $100k in stock this year", but it's a lot less stock since you're not locked into a strike price. If you want to leave after 1 year (post-cliff), you can leave under either scheme and get 1 y…

Not really BS: If it is really less compensation then employees.can view that as the price for job flexibility. And if they don't want or need that flexibility, they can go get a (maybe) higher TCP with a multi-year lock.

Re: Golden Handcuffs

#193

Post by vlovich123 »

dahart wrote: post #126
heavyset_go wrote: post #89

Earlier quoted context omitted.

> Employees deserve high-quality equity on par with investors. There is no reason that labor and time couldn't build equity, it's just that our current system favors those who use capital to build wealth over those who need to sell their time and labor to build wealth. A common reason I hear for the fact that investors get more equity is because of the "risk" they take on, as if losing some money is the only risk on…

> Sometimes, those workers are paid below market rate I like this justification above all the others; it seems both fair and easy to reason about. If I quit a $200k/yr job to work at a startup for $100k/yr in cash comp, then my time investment, or risk, is $100k/yr, and my stock compensation should reflect that financial value based on today’s valuation of the stock.

Without the investment funds, where is the startup getting the funds to pay you 100k/year? Some startups take a while to hit big and the only source of funding is investors. Fair or not, there’s a power imbalance and ignoring that seems foolish.

Also, the view you have is biased to the rare success scenario. In the failure scenario, the employee comes out ahead since they at least got some amount of their investment back.

Also not all investors are created equal. Some investors are strategic partners who can help grow your business. They forgo a salary because they provide advice and a social network the founder can tap into at critical junctures. That’s extremely valuable in some cases. Not all investors play that role (or play it well) but it’s hard to estimate the value of investors ahead of time just as it is to correctly evaluate an employees contribution.

Re: Golden Handcuffs

#194

Post by beckingz »

nonameiguess wrote: post #131
heavyset_go wrote: post #89

Earlier quoted context omitted.

> Employees deserve high-quality equity on par with investors. There is no reason that labor and time couldn't build equity, it's just that our current system favors those who use capital to build wealth over those who need to sell their time and labor to build wealth. A common reason I hear for the fact that investors get more equity is because of the "risk" they take on, as if losing some money is the only risk on…

The more amusing (or disturbing thing) is that we have created an environment where, practically speaking, investors have less risk than everyone else. We were just hit with one of the largest global disasters of the past century last year and the immediate reaction was flood equity markets with $3 trillion to prop up financial markets. Owners of capital cannot lose. Even before these last few years of craziness, wha…

The best part is that he sold the franchise and donated $100M to Georgetown University so that his wife wouldn't get as much of the divorce proceedings.

Re: Golden Handcuffs

#195

Post by URSpider94 »

After thinking about this, I think they’ve created a false dichotomy here. As an employee who is heavily compensated with stock, I’ve experienced “golden handcuffs,” where my annual compensation, including vesting shares, is much higher than what the company, or any other rational employer, would have paid me that year. The only way to fix this would be … to pay me less by not granting me restricted shares for so far into the future. Net-net, the enterprise will shell out less money in compensation under this plan.

I can see why companies don’t like this situation, because it’s very hard to reward performance with compensation when everyone is making far more than scale. Your best and worst performers all take home big checks. But to pitch this as an employee-friendly move is gaslighting at its worst.

Re: Golden Handcuffs

#196

Post by 6gvONxR4sf7o »

I feel like four year stock grants, more than anything else, are responsible for the upwards wage pressure that has led to the high pay in the Silicon Valley tech scene. You come in earning $X and a few years later you’re earning $2X without needing a promotion. Now if another company wants to steal you away they have to offer starting comp to match your golden handcuffs.

Reduced golden handcuffs can only hurt the rank and file labor market. No surprise a VC is enthusiastic about it.

Re: Golden Handcuffs

#197

Post by triceratops »

chris11 wrote: post #151
dahart wrote: post #148

Earlier quoted context omitted.

It’s not that tricky, because the investors are getting a valuation. The money I risk/invest/forego now because it’s a startup maybe ought to get the same valuation the investors are getting, that’s all.

I really agree with your point. I don't see how most startups could make competitive offers with unicorns/FAANG, unless it was for non-monetary reasons like a promotion.

Give out way more stock options, so that the pay is the same risk-adjusted.

Re: Golden Handcuffs

#198

Post by [deleted] »

logicslave wrote: post #186
joshuamorton wrote: post #103

Earlier quoted context omitted.

> Yeah but they arent though. 350-400k is actually somewhat low for senior. I wouldn't say this. It's solidly middle of the road for a Google or FB senior, and high/unreachable for an Amazon or Microsoft Senior. Its probably(?) on the lower side for Netflix. This is all before stock growth. Someone who has been a Senior for 5 years at Google or Facebook will be vesting shares that doubled in value, so the take home p…

Actually Amazon commonly beats Google comp, and matches FB. Senior employees at Amazon see the highest comp in the industry. Its less discussed, and really only at the lower levels that Amazon gets its reputation for being cheap and having lower talent. AWS Senior Engineers are top talent bar none.

[deleted]

Re: Golden Handcuffs

#199

Post by sombremesa »

nonameiguess wrote: post #131
heavyset_go wrote: post #89

Earlier quoted context omitted.

> Employees deserve high-quality equity on par with investors. There is no reason that labor and time couldn't build equity, it's just that our current system favors those who use capital to build wealth over those who need to sell their time and labor to build wealth. A common reason I hear for the fact that investors get more equity is because of the "risk" they take on, as if losing some money is the only risk on…

The more amusing (or disturbing thing) is that we have created an environment where, practically speaking, investors have less risk than everyone else. We were just hit with one of the largest global disasters of the past century last year and the immediate reaction was flood equity markets with $3 trillion to prop up financial markets. Owners of capital cannot lose. Even before these last few years of craziness, wha…

> The team sold for 8 times what he originally paid, not because of anything he had done, but just because television contracts for the entire league had become so much more lucrative over that time.

And what about your part in this play? The brand is valuable because of its fans. I assume you continued to support this brand, and by extension, this man you seem to despise. People like yourself directly contributed to his wealth — you might just as well not have.

Re: Golden Handcuffs

#200

Post by gnicholas »

alecbz wrote: post #162
hinkley wrote: post #25

Earlier quoted context omitted.

I feel like we should have PSAs on LinkedIn that tell you this every time you mark yourself as 'looking': If the Board and/or the VCs ever get uncomfortable with the % of the company that is owned by ICs, they will just print more shares of stock. And don't get me started on preferred shares. Has any IC ever gotten those?

Preferred shares were explained to me once this way: Imagine I give you $1M for 10% of your business. You now own 90% of a business that has $1M in assets. You easily sell the whole business for $900k (giving away $100k to the buyer, basically), give me back my 10% * $900k = $90k, and keep the remaining $810k for yourself. Preferred shares are a mechanism for preventing you from immediately liquidating my capital. An…

It's easier than this — you wouldn't even have to sell the business. You can just dissolve the company and return the assets to the shareholders pro rata.
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