The four year vesting schedule doesn't make sense

If there is only one thing I wished someone had told me when I started out it would be not to include grants as part of your compensation calculations. It is rare that they'll ever be worth a dime and even rarer that getting a little less/more will make any real difference. I'm assuming we're not talking about public companies here or ones obviously on an ipo track (very short list).

They are like getting a portion of your money in lottery tickets - sure there is a minimal real value to them, but the only rational way to use them in planning is to value them at zero.

Rank and file grants are only about retention. If you are bitching and moaning about a cliff and your finances you really misunderstand how business works here.

But that's very understandable - silicon valley thrives on misleading the young and energetic on this very topic.

The point about options pricing and appreciation is a good one, and it's worth considering: if you issue options to soon-to-be- former employees that only an irrational person will execute, only your most irrational former employees will hold shares in your company. Not good.

Not an HR specialist and this may be beside the point, but i believe if you do this for the new grad you'd also have to give that option to the tenured folks as well otherwise you'd basically be discriminating based on age which is illegal.

This is a throw away account for a couple of reasons...but I wanted to make a point from the engineering grunt point of view...

>The value of incentive stock options is simply the value of >being able to profit from increased market cap without having >to actually risk or tie up any of your own money.

That may be true of the value of the option from a purely market point of view. That said, unless you are part of the rare group who is part of a facebook, twitter, or related that can actually trade on the private markets before an exit event.

The reality is, most engineers working for a startup are gambling their time and efforts for a single investment. More often than not, those investments of effort and time do not always result in much of a return.

From experience - a number of startups will push for rates that are "below market" for the promise of returns. That said, in the same time, day to day engineers (not the founders) who have experienced an exit has been on the order of basically $20-30k/year (over the term of one's employment). Often finding an arrangement with a more established company will result in a better return during the same time.

If you are in the market to join a startup for the exit, weigh your options closely. If you are in it to learn, work with a close bunch, and want to build something interesting, by all means pursue it.

Joining a startup is an investment of time and effort, you should not enter as a non-founder with the expectation of a monetary return. Most fail.

>there is a huge class of bad hire that starts strong and decays rapidly.

Exactly. Also, startups = growth. As you grow, the game changes and usually gets harder. Someone you hired to take you from 0 to X^10 customers may do an ok job in the first 4 months when you have to go from 0 to X customers but may be terrible at getting you from X to X^2 in the next 4 months.