AdventuresinBeerSelling

Account Executive

Sourcing Material for Incentive Post

I discussed with a colleague about motivating incentives we've had and wished we'd had then he dropped a really good one on me: Additional Equity. Do you think this would be an effective incentive for you? Maybe an Annual Equity Addition Incentive? Is there some legal reason that I am missing why more startups don't do this? Let me know and I will probably have 1 or 2 more Incentive posts as I am building on some ideas for a larger post or article. Cheers!

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poweredbycaffeine

WR Lieutenant

☕️

A larger chunk of a big fat maybe that I either have to buy when I leave or hope isn’t diluted to hell when we sell?

Nah. Miss me.

AdventuresinBeerSelling

Member

Account Executive

Very good point.

Revenue_Rambo

Politicker

Director, Revenue Enablement

Some people will be all about it, for others it's just Monopoly money.Ultimately even though it's not "real money", there are dollars tied to it.

A few things that could impact why a company would or would not offer this.

-- Planning. Every time stock is issued the value of existing shares is diluted. So, if a company were to create a program like this a large pool of shares would typically be put aside to issue out. The best would plan for those allotments to go out over the course of 3-5 years. Since it's a finite quantity that means if they burn them all in 2 years, there would be nothing to get out for the next few unless they created more options and diluted again.

-- Valuation/Fund Raising. The more number of shares outstanding, the more an investor will require in exchange for funds. If you are creating this program after receiving funds, the investor could veto it as not to diminish the value of their own shares.

Risk for recipients:It's not all sunshine and rainbows if you are getting these options.

-- Unless your working for an Employee owned company, the shares will have no value unless your company is sold/acquired or does and IPO.

-- Most companies will have a 4 year vesting period for each new grant. So you've got to stick around AND wait for the sale/IPO.

-- Not sticking around??? First of all, you'll forfeit any unvested shares. Second, vested shares are not exercised shares. To exercise your shares you'll need CASH. Say you've got 10k shares vested at a strike of $2.00. You'll need $20k to exercise and own those shares. In most cases you'll have 90 days from the time you leave to make that decision. Oh and if they company goes belly up... so does your investment.

oldcloser

Arsonist

💀

Upvote this post- currently way undervalued!

AdventuresinBeerSelling

Member

Account Executive

Thank you for this breakdown!

Retired Sales Professional

Right on RR. 👍👍

QWhiz

Big Shot

Founding AE / ex-SDR

this should be a separate post and not a comment; way too much value

Pachacuti

Politicker

They call me Daddy, Sales Daddy

Hooking top performers with equity is a cheap way to keep talent from churning.

CuriousFox

WR Officer

🦊

Cash money in my hand right meow

jefe

Arsonist

🍁

Retired Sales Professional

👍👍

braintank

Politicker

Enterprise Account Executive

CASH

jefe

Arsonist

🍁

All day.

Equity is rarely worth the paper it's printed on

Justatitle

Big Shot

Account Executive

no sir no how, equity is a long long long shot for many orgs, I'll take the guaranteed money every day of the week 1 in the hand is worth far more than 2 in the bush in this scenario

Phillip_J_Fry

Opinionated

Director of Revenue

Equity has always seemed like a carrot on a stick, unless they have a set-in-stone plan to IPO in a certain time frame. It could be worth millions, or nothing. Stick around for 8 years to find out.

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AdventuresinBeerSelling

Sourcing Material for Incentive Post

15 comments

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