
A VC: Employee Equity: Vesting - bjonathan
http://www.avc.com/a_vc/2010/11/employee-equity-vesting.html
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portman
_"First, if you are close to an employee’s anniversary and decide to move them
out of the company, you should vest some of their equity even though you are
not required to do so. If it took you a year to figure out it was a bad hire
then there is some blame on everyone and it is just bad faith to fire someone
on the cusp of a cliff vesting event and not vest some stock. It may have been
a bad hire but a year is a meaningful amount of employment and should be
recognized."_

Right on. I've never heard ANYONE publicly advocate this. But it is absolutely
true. Terminating an employee right before his or her cliff vest is terrible,
but unfortunately it happens A LOT.

~~~
abstractbill
Totally agree.

I've also seen the converse of this though - employees leaving almost
immediately _after_ their one-year anniversary. Of course I completely
understand why they would do that, but it does leave a nasty taste in my mouth
every time I see it happen.

~~~
shazow
The cliff is incentive to stay that first full year. The gradual vesting of
the rest of the equity is incentive to stay past it.

If people are leaving immediately after the first cliff, then the proportions
might need to be adjusted. Perhaps they don't perceive the remaining stock as
valuable and the cliff is just a wakeup call.

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defen
_It is also true that many founders and early key hires negotiate for
acceleration upon change of control. I advise our companies to be very careful
about agreeing to acceleration upon change of control. I’ve seen these
provisions become very painful and difficult to deal with in sale transactions
in the past._

The first startup I worked at had an "acceleration upon change of control"
clause in the employee stock option plan. Then when we went for our Series A
funding, the investors (not USV) insisted that everyone agree to drop that
clause as a condition of investment (2 founders and 2 employees at the time).
Their reasoning was that such a clause would make us a much less desirable
acquisition target if people would be able to leave immediately after said
acquisition. We all understood the reasoning and agreed to drop the clause but
it was somewhat disappointing and would have been better if the clause were
never there in the first place.

