Replacing stock compensation with cash salary and bonus would be a terrible idea.
Other industries should be moving toward employee ownership, not the other way around. Employee ownership creates shared incentives. Shared incentives create alignment. Alignment helps eliminate an antagonistic relationship between employees and management. Instead of them vs. us, it moves it more towards all us. Instead of the fat cats and the lowly workers, everyone gets to reap the benefits or share the losses. Of course the founders and execs get more, I'm not saying it's equal, but it is a far better system than pure cash.
I can agree with this in principle, but in practice, who gets to write the contract governing this stuff? Do employees get a say?
I had options at my last job. They were worthless to me the entire 4.5 years I spent there. It wasn’t until 2 weeks after I was let go the company announced it was being acquired and my lottery tickets became worth something.
4.5 years of opportunity to be engaged at a deeper level as a shared owner of the business, wasted because the business never wanted me to be a part owner in the first place.
Definitely looking for more companies that operate the way you would expect here!
> I can agree with this in principle, but in practice, who gets to write the contract governing this stuff? Do employees get a say?
This is precisely what unions are for. It's possible to develop a professional organization that then informs expected standards of employment, such as shares in ownership of the company. The Actors Guild for example will specify and fight for the intellectual property of actors part of the guild, including in contracts where members of the guild are hired.
Yes - the contract I had agreed to allowed for some time to elapse after being let go and I would still be able to exercise the options.
I got a payday of $27k before taxes, $18k after taxes. In my opinion, I should've negotiated $10k additional salary if not more when I got the job; it would have been a far better payout without any 4 year requirement of loyalty (I was not appropriately rewarded for said loyalty).
On the other hand, stock compensation does come with significant drawbacks.
Due to tax implications, your options might be worth significantly less - if anything at all - because you often have to pay taxes before you are able to sell them.
If your company is not yet publicly traded, there is a significant chance it'll be heavily diluted by the time you are able to actually sell it. Even worse, you might never be able to sell it.
You might not be able to leave the job when you want to, because you are essentially tied to the stock option vesting period.
It also significantly increases your personal risk: what happens when the company performs poorly? You might lose both your job and your wealth at the same time.
The way I see it, the antagonistic relationship exists because management is judged primarily by the shareholder value they create. To an employee, the company is their daily life. To a shareholder, the company exists solely as a means to create money. I would not want to work in a company where everyone is driven solely by shareholder value.
Personally, I'd strongly prefer it if the employer had a workers council, and just gave out bonuses when it was doing good. You still share in the benefits, but you have far less personal risk.
> You might not be able to leave the job when you want to
That is something that people love to ignore - vesting periods are created specifically to keep you from leaving for a better job. While keeping the risk for the company fairly low.
Low mobility has been proven time, and time again, to repress income growth in people. (more often linked to owning a home, and not being able to move for a job)
You're an employee, not a co-owner. You're paid to do a job and, more often than not, your input is completely irrelevant to the leadership.
And as someone who is paid to do a job, not to be a practical co-owner, you should be paid in cash.
I currently work at a 50 people startup... and guess what? I'm no co-owner, no matter how much options I get. Last reorganization was done without my input... and no one will ask in the future. If you think you're anything more than a service provider - you're either in the executive management or deluded.
You’d rather the tech industry work like industries where only founders and executives reap windfalls of exit events? If your reply is that the company can offer bonuses when the exit event happens, (1) most companies don’t do this after the fact but stock is a way to force it to happen and (2) this doesn’t help employees who stayed for many years but didn’t happen to be there at the moment of the exit.
> employee ownership, not the other way around. Employee ownership creates shared incentives. Shared incentives create alignment. Alignment helps eliminate an antagonistic relationship between employees and management.
I don’t think this scales to something big. Eg Amazon gives stock. Amazon even gave stock to warehouse workers. I don’t think many people, from warehouse workers to senior AWS SDEs feel a true sense of shared alignment, and I bet many share a sense of antagony with management.
I work at a different megacorp. I don’t feel meaningfully like an owner. My 500k in RSUs is meaningless compared to the $2T market cap. Nancy Pelosi probably owners more shares than me.
Other industries should be moving toward employee ownership, not the other way around. Employee ownership creates shared incentives. Shared incentives create alignment. Alignment helps eliminate an antagonistic relationship between employees and management. Instead of them vs. us, it moves it more towards all us. Instead of the fat cats and the lowly workers, everyone gets to reap the benefits or share the losses. Of course the founders and execs get more, I'm not saying it's equal, but it is a far better system than pure cash.