Understanding and Navigating Equity Compensation
To Our Talent Community,
Equity compensation is a complex but critical recruitment vehicle that tech companies use to attract talent. For private companies, many utilize equity more heavily to offset their cash spend.
Recently, the dynamic of equity has shifted as these tech companies are now having to compete against AI companies that are flush with cash, putting pressure on teams to more effectively use their equity to recruit and retain the best talent.
Ultimately, in today’s ever changing market, there continues to be more emphasis on re-evaluating how companies think about their equity compensation strategy. Below we highlight considerations to help you do this.
Know your Company and Culture
Familiarize yourself with your Company’s culture and philosophy, as that is generally the backbone of your compensation programs. Understand why your programs are designed the way they are and how they promote your Company’s values. For private companies in particular, the equity compensation programs are heavily influenced by the founder and leadership.
Understand the Market Trends
While most pre-IPO tech companies still adhere to traditional 4-year vesting schedules with a 1-year cliff, some alternative approaches have surfaced. It is helpful to understand these alternate practices but know that they are customized to fit that company's culture and their specifics. Therefore, what works for them may not work for your Company.
One-year vesting schedules (e.g., Stripe, Lyft, Coinbase)
Profit Participation Units (PPUs) offering a percentage of profits (e.g., OpenAI)
Front-loaded vesting splits (e.g., Pinterest, DoorDash)
Navigating Equity Benchmarks
Unlike salary benchmarks, equity benchmarks can be challenging to obtain, especially for private companies. Factors complicating comparisons include:
Equity types (options vs RSUs vs PPUs)
Vesting schedules (traditional vs. unique)
Valuation methods (preferred vs. 409A)
Platforms like Pave, Compa, Levels.fyi, Kamsa and Complete are emerging to provide more insights into market trends.
Recommendations for Talent Leaders
Advocate for your Company by understanding what differentiates your compensation program from others.
Collaborate closely with your Total Rewards team to discuss your programs and why it was designed the way it is.
Stay informed about market trends by tracking competitive offer details and their impact on acceptance rates. Every candidate conversation is an opportunity to gather market intelligence.
Build a network with other talent leaders to share insights.
Follow leaders in the compensation space: Charlie Franklin (Compa), Matt Schulman (Pave), and Zuhayeer Musa (Levels.fyi).
Be prepared to address valuation discrepancies: Candidates may discount company valuations by up to 25% in uncertain markets. Recognize the shift towards cash and recent market conditions have led candidates to value immediate cash compensation more highly.
Educate yourself: Utilize resources like Carta's Equity 101 training to understand equity fundamentals.
By staying informed and adaptable, you and your teams can play an active role in navigating the changing landscape of equity compensation more effectively.
Mike, Adam, Jill & special thanks to Armina Behrouzi (Founder & Principal, Wailea Compensation Consulting) for her contributions to this month's newsletter
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🪄 Placement Highlights:
We are thrilled to announce Sherry H. as the first Senior Recruiter at Giga Energy.
🚀 August Leadership Moves in the Market:
Katie Turrel, former Head of GTM Talent Acquisition at Charlie Health, has joined The Farmer's Dog as Vice President of Talent Acquisition.
Michelle Tang, former Talent team member at Inflection AI, has joined Microsoft AI’s Talent team.
Clinton Dleave, former Global Talent Acquisition - Technology at Airwallex, has joined Sei Labs as a Talent Lead.
Kevin Doiron, former Director of Executive Recruiting at Okta, has joined Moveworks as Global Head of Talent Acquisition.
Ivori Johnson, former Head of People, Talent, and DEIB at ChartHop, has joined Harry’s Inc as Global Head of Talent and DIversity.
Tristan Bice, former Director of Technical Recruiting at Meta, has joined Wealthfront as Director of Talent Acquisition.
Tara Shapowal, former Head of People: Employee Experience at Snorkel AI, has joined PsiQuantum as the Director of HR Operations.
Kelly Grossart, Senior Director of Talent Strategy at Dropbox, has joined the Chief People Officer in Residence (CPOiR) program.
Rick Jones, former Global Recruiting Lead at Stripe, has joined OpenAi, leading the Research Recruiting team.
Will Barnett, former Head of Operations at FutureHouse, has joined Rad AI as the Recruiting and People Operations Lead.
Ashlee Barden, former CEO of Cruz Recruit, has joined FERMÀT as Head of Talent.
Chris Marty, former Operating Partner of Talent at Unusual Ventures, has joined Augment as Head of Talent.
Jenny Jongejan has joined AngelList and their Technical Recruiting team.
Steven Do, former Head of Leadership Recurring at Brex, has joined Underdog Fantasy as a Lead Talent Partner.
Cindy Nicola, former Vice President of Talent Acquisition at Rivian, has joined Databricks as Vice President, Global Talent Acquisition.
Taylor Carney, former Senior Manager of Talent Acquisition Enablement at Toast, has joined Zillow as a Recruiting Manager.
André Gordenstein, former Head of Market Expansion at Atlassian, has joined The Voleon Group as a Recruiting manager.
Maya Saric, former VP of People at Parallel Systems, has joined Serve Robotics as VP of People.
Paul Sledd, former Principal Recruiter at Keystone Strategy, has joined Chroma as a Talent Acquisition Lead.
Stephanie Snyder, former VP of Search at Hunt Club, has joined the People team at Multiply.
Tiffany Fenster, former Head of Talent at Stripe, has joined ClassDojo as Head of People.
Ariana S. Moon has been promoted to VP, Talent Planning & Acquisition at Greenhouse.
Megan Mach (Lorig) is the new Head of Talent at OP Labs. Prior, she was the Head of Talent at Cointracker.
Suki Bhatti, former Senior Manager, Global Business Recruiting at Affirm, has joined Brightwheel's Talent Acquisition team.
Greg Bertleff, former Talent Acquisition at Meta, has joined Sanity as Director of Recruiting.
Hannah Barfiled Spellymeyer, former VP People at Yuga Labs, has joined Slingshot Aerospace as VP, People.
Elizabeth Anderson, former General Partner at Intersection Fintech Ventures, has joined Google to build their Private Equity & Venture Capital Partner Program.
Evan Connor, Founding Partner at Ponto Talent LLC, has joined Ambience Healthcare as VP, Talent.
Daniel Grayson, former VP, Talent at Astronomer, has joined Crusoe as Director of Technical Recruiting and Recruiting Operations.
Emily Sung, former Sr. Manager, People Operations & HRIS at Glassdoor, has joined Postman as Sr. Recruiting Operations Manager.
Su In P., former Operations Manager (Sales, Recruiting, Marketing, HR), has joined Metronome as Head of Talent Acquisition.
Mandy Ching, former Talent Acquisition DEI Program Director and Sourcing & Operations Leader, has joined SentinelOne as Talent Acquisition Programs & Enablement.
Patrick Sullivan, former Head of Sourcing, Google Cloud at Google, has joined Expedia Group as Sr Director, Global Talent & Discovery
Robyn Watson, former, has joined BioRender as Manager, Talent Operations.
Jason Wong, former Head of Talent at Athelas, has joined Commure as Head of Talent Acquisition.
Ashley Rasmussen, former Head of People and Talent at NexHealth, has joined Federato as Head of Talent.
Michael J. Case has joined Josys as Head of Talent.
Nancy Coleman, former Talent Acquisition Leader at Meta, has joined Adeia as Head of Talent Acquisition.
Chris Segura, former recruiting leader at Instacart, has joined Rain AI to lead their Talent function.
Aris Sarfati, TikTok’s Global Head of Engineering Recruiting, is Patreon’s new Head of Talent.
Did we miss your career change? Let us know: hello@gbdtalent.com
📖 What We’re Reading & Listening to:
The AI Summer - Benedict Evans
Time management techniques that actually work - Lenny Rachitsky
Improve strategy, influence, and decision making by understanding your brain - Evan LaPointe on Lenny’s Podcast
A conversation with NVIDIA’s Jensen Huang - interview by Stripe CEO Patrick Collison
Gmail Creator Paul Buchheit on AGI, Open Source Models, Freedom - Y Combinator Lightcone Podcast
Figma Config Talk: Rituals to Unbreak Planning - Yuhki Yamashita (Chief Product Officer), Figma
Bar Raiser LinkedIn Post - Nolan Church
Guidelines for using AI in our interviewing process - Greenhouse
Guide to Candidate Use of GenAI - Arctic Shores
Generative AI Predictions 2024 - CB Insights
Inside the mind of a master procrastinator - Tim Urban TED Talk
📚 Playbooks:
Your Guide to Evaluating and Selecting an ATS: A guide with helpful process frameworks, and evaluation templates to help you make an informed decision about selecting the ATS that is the best fit for your company.
Navigating an IPO: A guide to help you navigate your team through the IPO process. It includes tools and tactics to prepare your team, proactively communicate to pending candidates, and evolve your recruiting operations to support the shift in business.