Dan's Resource List

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Compensation, Equity and Leveling Frameworks

Equity Resources

Best Resources

There are tons of great resources out there. So, I’ll point you directly to two that stand out incredibly well:

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Holloway Guide to Equity Compensation⁠

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Joshua Levy’s Guide to Equity Compensation⁠

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Carta Resource Center⁠

and

101 Series⁠

⁠

Great articles to read

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OptionPlan | Index Ventures⁠

(really great tool for sketching out an option plan strategy)

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Cooley: Should you give % of equity in offers; should it be on fully diluted or shares outstanding?⁠

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Andreesen Horowitz: The Lack of Options for Employee Stock Options⁠

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Gusto: Here’s How Startup Founders Should Offer Employee Equity⁠

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YC's Startup School: good roundup of resources⁠

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List of startups with extended exercise windows⁠

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Index Ventures’ Handbook: Rewarding Talent (Equity for European Startups)⁠

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Quora Thread: Employee Pool Size⁠

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Venture Hacks: Option Pool Shuffle⁠

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AVC: Option Pool Sizing⁠

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Sam Altman: Employee Equity⁠

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Equity Zen: Understanding Equity Compensation for Startup Employees⁠

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Coding VC: Analyzing AngelList Postings⁠

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AVC: Employee Equity⁠

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Tom Tunguz: SaaS Stock-Based Compensation⁠

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First Round: The Right Way to Grant Equity to Your Employees⁠

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Quora Thread: Benchmarks for Equity Compensation⁠

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Front’s Equity Calculator⁠

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Clerky’s Legal Handbook (good equity + founders FAQ primer)⁠

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Cap Table Hygiene by Jenny Fielding⁠

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Pave: (Most) equity benchmarks are lying to you⁠

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Unicorn Stock Options—Golden Goose or Trojan Horse?

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SSRN-id3228400.pdf

1.1 MB

⁠

Refresh Grants in Startups

Based on a dataset of 596 companies in the San Francisco Bay Area in Information Technology in early 2019.

At a high level:

78% of refresh grants are on a four year schedule.

For refresh grants, ~48% of companies stick with a monthly vesting schedule with a 1 year cliff for the refresh, ~25% have a monthly vesting schedule with no cliff.

Most companies (66%) give refresh grants outside on an "as needed" basis. (ie. they have not implemented an evergreen model or aligned to comp reviews).

For refresh grants, see frequency below:

1 year cliff vest, annual vesting thereafter - 41

1 year cliff vest, quarterly vesting thereafter - 26

1 year cliff vest, monthly vesting thereafter - 282

6 month cliff vest, quarterly vesting thereafter - 1

6 month cliff vest, monthly vesting thereafter - 5

No cliff vest, monthly vesting thereafter - 150

Other - 33

Vesting length for refresh grants:

3 Years - 19

4 Years - 465

5 Years - 12

Other - 41

Refresh Practices

As Needed/Discretionary - 396

Annual/Discretionary - 89

Annual/Formal Plan - 54

Not Done - 57

Wealthfront (a good public-facing example)

They have a

wonderfully written blog post⁠

(that originally piqued my interest in Evergreen)

In a nutshell:

The Wealthfront Equity Plan is designed to specifically handle the four most important cases for granting equity to employees. Each year you create a new option pool that addresses the following needs:

New Hires: These grants are used to hire new employees at market levels.

Promotion: These grants are intended to reward employees who have been promoted. Promotion grants should bring the recipient up to the level you would hire her at today for her new position.

Outstanding Performance: These grants, made once each year, are only intended for your top 10% to 20% of employees who truly distinguished themselves on the basis of amazing accomplishments over the past year. Individual performance grants should represent 50% of what you would hire that person at for their position today. This pool should be reserved for non-executives.

Evergreen: These grants, which are appropriate for all employees, start at an employee’s 2½-year anniversary and continue every year thereafter. The idea is you don’t want to wait until the employee’s initial grant has been fully vested to give a new grant because by that time the employee will evaluate new opportunities. Annual evergreen grants should equal ¼ of what that employee would receive if she were hired for her same position today. Giving ¼ of the market rate for a position each year, rather than a lump sum grant that covers the next four years, will smooth out the vesting process so the employee never reaches a cliff. As I said before cliffs cause people to raise their heads to consider alternatives and should be avoided at all costs.

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