[acslater00]

Because the 10-year employee will be granted additional shares after her initial option grant is fully vested. And in a world where both have the option of leaving and preserving their option value, the follow-up grant will likely be larger than it is in the status quo, because the company will have to incent B to give an additional 6 years of her life to the startup.

[a13n]

Sure but if you join on day 1 then the refresher grants could be peanuts compared to your initial offer? Why wait 4 years to find out you won't get any more equity instead of baking it into the original offer with a longer vesting period?

Longer vesting periods + more equity guarantee that employees get more equity. 4 year vesting lets the board decide what happens.

[encoderer]

In this scenario you give those employees a new 4 year refresher grant every single year. Not one at hire and one four years later. You pile them on both as a form of performance based compensation and to prevent the exact situation you describe.

In your example the guy who leaves after 4 years of low salary makes a lot less than the guy who gets incremental grants and a growing salary who is a vp at the end making 500k a year.

[a13n]

Seems like your incremental grants would be significantly less than the initial ones joining early on, no? Or is it common that leaders get big refreshers along the way?

I would say I'm pretty unfamiliar with early employee refreshes but from what I've heard refreshers are usually small compared to the initial grant.

[encoderer]

Yeah I think if you have somebody who is a classic "first engineering hire" and s/he grows into an engineering leader, each major promotion (to manager, director, vp) brings an opportunity for a rich follow-on, as well as a normal yearly grant. Now if somebody is particularly adept at negotiating and somehow take a full point out in their initial grant, you're probably right that incremental grants won't touch that value. But that is 2-4x what I've internalized as the norm.

[acslater00]

No one is going to 2.5x their 4 year early grant and vest it over 10.

[a13n]

You could do 1.5x over 8. Employee gets more equity in the long run if they stay and still a great payout if they only stay 4 years. It's similar to what I plan to do for my company.