Greg Lohman, compensation consultant, discusses board friction over equity pool refreshes during an a16z panel on executive compensation.
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Lohman: Early startup negotiations create five-fold equity disparities between identical roles
“And we come in and start working with companies, you might see two employees who basically do the same thing, and I have five times as many options as that other person. I mean, there are huge disparities, and that's just how they negotiated coming in and when…”
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Lohman: Stock options strictly outperform RSUs for high-growth pre-IPO startups
“There's really no scenario where RSUs are better than options in that model. And so from a pure upside, from a pure opportunity perspective, from a flexibility perspective, from a tax perspective, from an administrative perspective, there are lots of advantage…”
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Lohman: Startups must establish job leveling frameworks early or face failure
“And if you don't get that framework set up initially, you're dead.”
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Lohman: Late-stage growth rapidly inflates annual equity issuance into double digits
“Relative to what's going on in an earlier-stage company that's moving along, but hiring at kind of a reasonable rate, I mean, you can go from a few percentage points of equity to double-digit percentage points of equity pretty quickly.”
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Lohman: Big tech RSUs function as value preservation, not high-upside returns
“We think of RSUs at a place like Google is, is value preservation, right? They're in a value preservation mode growth, but not huge returns, and you're giving an employee a share of stock, it's got value, that employee can look at that share and say, at the en…”
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Lohman: Startup compensation strategies shift rapidly in the 12 months pre-IPO
“A lot of the things we talked about with RSUs versus options, the foreign and a price your dilution, all those things are going to change most rapidly, in most cases, right as you go public, right in that stage. And You know, you hire somebody 12 months out, s…”