"What do you do if, halfway through the year, the corporate board tells you to cut spending?"
Whatever you would otherwise have done. If you have to lay people off, you lay people off. Since the yearly pay is known in advance, the only odd bit is the schedule of payments... if you have to lay someone off, you've actually spent less than you would have if all their paychecks are the same. But the details of all this aren't really the point -- I'm sure they could be worked out, if someone wanted to try it. I may if I hire employees at some point.
Paying partly in equity seems nice, but it seems even less sustainable than distributing an employee's paycheck unevenly.
Paying partly in equity seems nice, but it seems even less sustainable
In a company that were not growing, it would indeed be unsustainable to pay in equity (unless the value fo the equity were continuously shrinking. But why would a startup company not be growing (valuation rising)? Unless it is a failure, isn't it normally growing?
Whatever you would otherwise have done. If you have to lay people off, you lay people off. Since the yearly pay is known in advance, the only odd bit is the schedule of payments... if you have to lay someone off, you've actually spent less than you would have if all their paychecks are the same. But the details of all this aren't really the point -- I'm sure they could be worked out, if someone wanted to try it. I may if I hire employees at some point.
Paying partly in equity seems nice, but it seems even less sustainable than distributing an employee's paycheck unevenly.