Re:Liquidity Is Coming
by drchopchop on Friday December 04, 2020 @09:47AM
(#25302764)
What happens if you have an underperforming employee and end up having to fire them in the first 3-6 months? Do you really want to give them permanent equity in a company before they've proved at least some value? Some sort of clawback structure would be necessary here.
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Employees take less cash in exchange for equity. They earn the equity as a part of compensation. Under what theory you want to claw it back?
In addition employers are protected by a vesting cliff, and after that it is their fault if they keep underperforming employee around.
Re:Liquidity Is Coming
by choppaface on Friday December 04, 2020 @03:32PM
(#25307458)
In the case of 83b, the unvested shares are returned. Even the bonus-to-cover can be returned contractually—- the bonus-to-cover never even has to hit the employee’s bank account.
RSUs are probably better but the equity games are set up right now such that startups issue options.