Ask HN: Vesting schedule with no cliff?
I've been in negotiations with a startup and I've liked everything I've seen so far.
The founders are great people and I've had a ball chatting to them over 3 meetings.
However, when it came down to the offer, the stock option grant doesn't have a vesting schedule. It vests 100% only after the full 4 years have lapsed.
Now I've worked for a startup before where I was granted stock and it have the usual one year cliff, then 25% per year thereafter until the full 4 years. And as far as I can tell from talking to people and researching online, this is the usual thing to do.
Anyone been through that? Any ideas as to why they would have done the grant this way? I will be asking these questions directly of them next week but thought I'd hear what hackernews has to say.
18 comments
[ 2.5 ms ] story [ 49.4 ms ] threadAsk for the 4 year vesting schedule.
I've already put this down as a deal breaker to me. So I'll catch up with them next week and see how they respond.
And negotiate for single trigger acceleration.
And really, just don’t do business with these folks, 4 year cliff is way out of ordinary and hostile to you. You’ll have a much better few years elsewhere and there is little to no chance of success with these folks if they’re fumbling on basic recruiting.
Note that generally employees only have 30 days to convert if they leave. So even if options are vested, how likely will they convert if they leave within a short period even if some are vested immediately? If the employee thinks the company is so awesome that they should convert options, then why would they leave so soon?
I’ve usually seen vesting periods of 3-5 years total.
Note there is nothing stopping you from having multiple grants simultaneously. Ie you get these options now as part of this deal. Then sometime in the future before the originals are all vested you can get another grant.
Lastly, if this is really early stage what is the likelihood that they will be worth anything ever? Perhaps you should optimize on cash.
The cash component doesn't worry me at this stage and you're right, the options basically aren't worth anything initially.
That said, there are many things that can cause someone to leave a company: pressed for cash, overseas family in need, not getting along with the team, etc...
Should something like this happen, I would leave after having invested 1, 2 years into the startup without having had the chance benefit from what I helped build.
Lastly, it's not really about the grant per se. It's a startup. The odds aren't in our favor. But it's more about what is fair - it seems fair to me to reward employees for their efforts without such a long cliff.
Thanks again!
Good luck!
Just ask for a standard agreement with a 1 year cliff plus monthly vesting after.