I am so fascinated at how my grandfather would spend decades at a company, my Dad would spend a decade, and now people decline jobs over the expectation that they stay 1 year. And I was in my first job 51 weeks.

I don't think you are wrong in doing so as the market in tech moves fast while employers move like slugs, it is just such a shift from what I grew up to expect.

The problem isn't necessarily that the employee expects to want to leave in under a year, so much as they don't want the company to have an incentive to let them go in under a year.

Do companies really fire people at week 51 to save some stock?

Hiring is tough and you waste a lot of time onboarding people and getting them to a productive state, firing them just to save some stock after 50 weeks seems a bad idea, not to mention the morale implications.

It absolutely happens. I worked as an early employee at a company for its first 11 months … the founder was the main investor and a serial entrepreneur. He clashed with the CTO from the start and progress stalled … after a major disagreement, he decided he would rather sell the company to a competitor than continue to deal with the CTO. At the 11 month mark we were all told that we were fired, the company was shutting down, and and if we wanted severance, we’d have to sign away our rights to any claims from the sale.

Companies do let people go to avoid granting stock. Banks also do it to stiff employees on their bonus. For startups it’s a forcing function to decide if they want to keep someone. (I’m not saying this is right, just explaining why it happens)

Happened to me.

How do you know that was the reason?

Downvoted for asking a question?

That's fascinating reasoning. It makes sense, but that's the same sort of logic where employers will give hourly employees 39.5 hours a week because if you give them 40 they become "full time". Has that kind of short sighted thinking really invaded the software engineering industry? That's scary.

Why would avoiding paying employees benefits be short-sighted thinking? If anything it was short sighted of the US government to ban increased wages during WWII - leading to employers paying benefits which gums up the labor market.

It's short-sighted because employees are humans, which perform much better when healthy and excited to work. Stingy/hostile employers have high turnover and employees who treat work as a zero or negative sum game.

A good example of this is the This American Life story on NUMMI: https://www.thisamericanlife.org/561/nummi-2015

Toyota took one of GM's worst plants and turned it into one of its best by treating workers with respect. Hearing the workers talk about the transformation stunned me.

Employers are also human, and prone to the fallible traps of responsibility that befall many people managers and executives, including but not limited too:

* not trusting your team to do their work and by extension questioning whether they are working "hard enough" (or dreaming of ways to extract more blood from stones)

* some flavor of impostor syndrome, needing to prove your value by making sweeping changes to the team process even if inheriting a successful team

* not having either the back bone or clout to question status quo, including demoralizing cultural habits such as stack ranking

There is a reason the majority of employers (including managers) are generally bad and the good ones are few and far between - it's human nature.

I'm reminded of Microsoft Japan piloting a 4 day work week and announcing in 2019 that the trial ended up increasing productivity by 40%. They ended up not making the change permanent. One small company in New Zealand - Perpetual Guardian - did the same trial in 2018 and saw the same effect, they made it permanent.

Most companies operate like Microsoft.

Are you suggesting basically every retail chain in America is using a fundamentally broken compensation system?

Yes, because basically every retail chain a) can dump a lot of externalities on society at large, b) is or wants to be publicly traded and evaluated on very short-term metrics, and c) is run by believers in the managerialist ideology that dominates American business culture.

Broken systems product broken systems.

Something I don't see mentioned in the sibling comments is that this can also put the employee in a bad position when they don't like their job but are in the mid to late stages if their first year. You either tough it out the remaining _X_ months or quit and take a huge hit in income because you're leaving before the equity cliff.

I could see that with a 2-5 year cliff but 12 months is not a long time in a job.

I wrote "... when they *don't like their job* but are in the *mid to late stages* ..." so in this case, it'd be 3 to 6 months which isn't a long time to hold a job in general, but it is a long time when you hate your job.

Now they'd have an incentive to let them go in under a quarter, by that logic.

Not sure if that's really their concern here. Companies don't just ditch reasonably well performing employees because they want to avoid compensating them. That would already mean that each time RSUs vest the company would have an incentive to fire.

Sure, and they do. It’s best to avoid that incentive by having stock grants vest frequently and fractionally. It’s essentially treated as salary, it might as well be paid out fractionally at the same frequency as salary so that no perverse incentives exist.

This isn't complicated. If an employee is having a bad first year or the company is performing poorly it incentivizes firing.

Much less so, because productivity is low in the first few months.

Hiring is one of the most time sucking activity, and the whole notion of stocks/RSUs is to make people stay.

Companies sure don't act that way given that people generally need to leave for a raise.

Things are very different in a field with long product cycles. If it takes 5 years to get a product into the field then the company has a huge incentive to retain employees.

Sure, but if you're depending on the cliff for retention you're working against your own interests: Employees will leave the 53rd week, just after you've spent all that effort training them within your environment.

Long term retention hinges on long term adequate compensation and long term quality environments. There's no need for cliffs.

Sure, there is no need for a cliff, but if you are attracting the right talent with adequate compensation (that keeps up with market changes!) the cliff does not matter.

How can you attract the right talent when competing with companies, like Google, Amazon (with their cash bonus payment model to compensate their weird back weighted RSUs) or Netflix being able to hand out offers without any of these risks?

An engineer with family is unlikely to take such a risk and rather join Google or even Amazon where compensation is guaranteed.

I was in a meeting the other day where one of the attendees had been working at the company for 20 years and another for 15. By my guess, I reckon people work here for about 7 years on average before moving on.

In my experience, people tend to be either lifers and stay for 10+ years, or bounce between jobs every year or two. Lifers tend to accumulate in companies that cater towards them (good work/life balance and job security) due to low employee turnover, so if you're in the other group, it appears that everyone in the industry only works for a year.

I believe this is right. Also, bad companies with high attrition like eg. Amazon hire alot more (hires/FTE/year). So you have a higher chance ending up at such places then their share of all companies.

I mean, average tenure is probably the best indication of how good a employeer is (unless there are few companies at a location). I was pretty suprised to hear it was 2 years at Google.

There's shift of context too. In our grandparents' generation, companies also promised to keep the workers around and sometimes to give them pension. There would be a steady career path based on seniority as well. Something along the lines of that you take of the company and we will take care of you. None of such promises exists nowadays.

I thought the OP meant that since most of the time startups want you to sell you on taking less in salary in lieu of options it makes sense to start vesting those options immediately. I didn't take it to mean that they didn't intend to stay for at least a year. Looking at it that way I think it does make sense. The lower salary take place immediately.

It also smooths out when people leave by spreading grants out. Some companies have stock grants vest and bonus payout all at once, once per year.

"I declined an offer from a known and well funded startup because of a one year cliff on equity"

You might as well not bother interviewing at any startups if this is a deal-breaker for you. Whether you think it's fair or not this is an extremely standard term and no company is going to alter their employee stock grants on a one-off basis.

Not really true. Have achieved multiple companies removing the 1 year cliff for me.

The one year cliff is not that problematic to me since I would expect I am getting paid market, and the options are like a hiring bonus (which you often must return if you quit within a year). What am I missing? Is people really worried that a startup whose stock has risen will fire a productive employee?

That said, I have seen 5 year vesting (which seemed like a red flag to me), and have heard of Amazon's schedule where you mainly vest in later years. These were bigger red flags for me than a 1 year cliff.

Depends on the company. I joined Twitter in 2016. The stock, which was circa 1/3rd of my total comp, had a one year cliff. 7 months in, one executive got the upper hand in a power struggle, pushing out my boss and laying off the people he hired, me included. I don't think they did it because of the stock. But I'm sure it didn't hurt. I'm still mad about it.

Disclaimer: Ex-Amazonian, so discount as you see fit based on whatever brainwashing you might assume I’ve been subjected to ;)

The rear weighted AMZN approach made sense to me in terms of both optimising retention and some proxy for reward to contribution. I say this also as someone who left after 2 years and as a result left most of their stock unvested. It definitely made the choice to leave much harder so I’d expect it to skew more heavily toward retention benefits than a typical schedule. A typical schedule has a linear growth of what you’ve vested. I’d expect the value of contribution of a person to grow over time though. More context, more experience, more everything. Hopefully that means the you 3 years from now is making a more significant contribution than the you they hired. Typical schedules hope that the increase in valuation accounts for that compounding return. AMZN have shifted it to the vesting schedule.

That said they always talk about “total compensation”. So for the stock you’re not getting in the first two years you typically get as cash via a “hiring bonus” anyway. You could always just use that cash to go buy the equivalent amount in stock, no vesting required.

Can you say how does the "rear weighted" approach works? Is it just RSUs with a cliff?

Also I would curious what you left Amazon before those vested?

It's RSUs vesting at:

- 5% after 1yr

- 15% at 2yrs

- 20% every 6 months for years 3 and 4

The 401k match also has a 3 year cliff.

But as they said, years 1-2 you typically get a signing bonus

I was exposed to this while talking to an Amazon recruiter recently, while I also hear stories about how they seem to work people to a breaking point.

The median tenure at AMZN is also 1.5yrs, per linkedin. Their strategy seems to be to work their people extremely hard to earn their RSUs and pay them like plebs with hard caps on earning potential (base comp).

>"... while I also hear stories about how they seem to work people to a breaking point."

Is this a well-known thing then? More so than other FAANGs?

As the other reply said, vesting was 5% first year, 15% second year, then 20% per six months.

As for why: a rebalancing of priorities re work/life/travel balance and a better sense of connectedness to my actual work and the success of the company. Not gonna lie though, I look back at what I left on the table and the AMZN share price over the past 2 years and I still wonder if it was the right choice.

If you are joining an early enough startup then your cash salary is very likely to be below-market, at least when compared to FAANG etc.

I feel like amazon-style vesting helps remove some perverse incentives.

It makes "stay 53 weeks and cash out" less appealing, it makes "stay 6 more months to hit the next cliff" less appealing, and it rewards long-haulers (who are underpaid almost everywhere else in tech).

To be fair, they're also underpaid at amazon.

Yes, that was my hope also. As it becomes more common to not have a cliff.

It was just strange that the recruiter couldnt discuss this further or at least give an offer with a nice cash compensation that would be paid out monthly (sort of like how Amazon does it) to compensate for cliff.

Anything in particular you said? We're you coming from a strong position to bargain for that?

Really? I'm surprised. My employer just removed cliffs for new offers, it does seem to becoming more popular. But my assumption is the cliff is something I couldn't easily negotiate as an individual.

At high-quality VC-backed tech companies? I guess it might be possible it you were super early.

It’s happened multiple times for me, all with extremely well known VC backed companies. Once at later stage, but applying for a very senior role, and another at an early stage, where there was a good fit.

It can be a tough sell, and recruiters are trained to just say no, but persistence pays off. Same thing applies to getting jobs in general. If you aren’t persistent in your application process and aggressive in your negotiation process, you simply won’t have the best outcomes. It just becomes easy to turn you down.

Nice negotiating! and I agree about the persistence.

It is standard at FAANGs as well.

Facebook has no cliff. You still have to wait a little over a quarter, though.

They will if they want you enough. Even Google can be talked out of the 1-year cliff. Doordash doing this means other employers will have to in order to compete if an employee has a competing offer from Doordash.

Google has no cliff.

A 1-year cliff / 4-year vest has been standard as long as I remember. Is this not the case anymore?

No, most big companies don't have cliffs anymore (Google, Facebook, etc...). They pay out monthly or quaterly. At least if you already worked for a while elsewhere (because they have to buy you out basically).

Why would you otherwise take the risk?

I'm curious about Microsoft- anyone know if Microsoft has a cliff on RSUs?

My non-new-grad employment with Microsoft had a 1yr vesting cliff. As others have previously mentioned, as long as it’s an established company I see no issue with this since you get a solid signing bonus if continued cash flow is the concern.

This is to the point - cash bonus can compensate this somewhwat. And cash bonus typically doesnt have to be paid back in case of layoff.

I saw a recent (< 3 months) offer from MSFT and it contained the „standard“ 4y vesting schedule with a 1y cliff and then quarterly vesting after.

I think removing the vesting cliff is great but personally I am not worried as I never sew the cliff as a problem.

I should clarify that my experience is with startups (pre-seed to B stage etc) not FAANGs or big cos.

It is the case, but it seems like it only persists because it is traditional. I'm not aware of any basis by which the employees should be willing to accept deferred comp for the first year. It sets up all kinds of bad incentives.

I'm right here with you — along with having standard very long exercise windows… 10 years or whatnot.

I've both chosen to exercise and not exercise on a short 30-day window but balancing FOMO vs future regret is hard with the volatility of a typical startup.

I worked at a startup and took a salary reduction in exchange for stock options with a one year cliff.

After busting my butt, often working 12 hour days for 9 months, they fired me without cause.

Because I hadn't quite worked there for a whole year yet, I didn't get any of my stock options.

I will NEVER make that mistake again.