I don't know... What are some realistic numbers here? Suppose a mere $10m acquisition, 5% is a mere $500k. Suppose 10 employees, 5 are maxed out, the other 5 have 4,3,2,1,0 units respectively. The payout range then is $14k to $71k. Working there for 5+ years, taking home only $71k, which is definitely nice, while the boss gets at least a few million... I think employees should be made as happy as possible at acquisition time. I'm not sure this scheme would accomplish that, but I don't know what realistic numbers would be nor what competitive options/equity figures would look like.
Could be interesting to also apply this scheme to the company's yearly earnings! That way everybody would get something out of it, and it wouldn't focus the company so much on an acquisition/IPO.
Boss gets those few million because they took the initial risk, provided the jobs, etc. Especially in this period of history, there is nothing stopping an employee from starting up their own venture and trying to hit the home run.
You could run another thought experiment. $50M exit, 20% goes to employees (because 5% is just the minimum). Suppose 10 employees, 5 are maxed out, the other 5 have 4,3,2,1,0 units respectively. 20% of $50M is $10M. The payout range then is $286K to $1.4M (before taxes).
