Startup RSUs Special Issues
RSUs @ Startups. We have had lots of traffic lately on our classic post on RSUs at startups. Here's some more insights if you want a deeper dive:
Switching to RSUs. As startups stay private longer, more and more move to RSUs. Why? Stock options become cumbersome as company valuations and, therefore, stock option strike prices increase. Companies have more incentive value per share (and, therefore, can use fewer shares) with RSUs because they are full value grants (no strike price). And startup hires appreciate the simplicity of RSUs and avoiding the headaches (and, often, forfeiture) associated with the early expiration of stock options.
Liquidity and RSUs. A little-known downside of RSUs is that they are more restricted as to early liquidity opportunities. Carta has implemented an innovative approach to this with single-trigger RSUs. More here from Jackie Ammon.
Double Trigger Confusion for RSUs. Since nearly all RSUs at startups have "double trigger" vesting designed to defer taxes, many people with RSUs think they have double trigger acceleration upon change of control. Weirdly, that's not the case. Same name, different concept and results. Double trigger vesting delays vesting and, therefore, taxes until liquidity. Double trigger acceleration upon change of control speeds up vesting so shares vest in full after two (that's the double!) triggers are met: (i) change of control, aka merger or acquisition and (ii) termination of employment. More on double trigger acceleration here in a new blog post. That's the one to negotiate, even if everyone around you seems to be confused and think it's already included (with the tax-deferral double trigger). Sorry, I know it's confusing.
Startup Compensation Data. I added a few great links in March to my ongoing blog post on startup equity market data:
Updated Friends @ Carta contact
Betts' Recruiting's compensation discussion and data for Enterprise Account Executives
FairOffer.ai's data-science based comp tool
Betts' Recruiting's 2024 Compensation Guide for Sales, Customer Success and Marketing
Carta's State of Compensation H2 2023
Good luck! Please continue to send me any great resources you find and I'll add them to the list.
Attorney Mary Russell counsels individuals on startup equity, including:
You are welcome to contact her at (650) 326-3412 or at info@stockoptioncounsel.com.
