Archive for the ‘vesting’ Category

The “Summary of Vesting Data” post presented the overall patterns in my vesting data and delved into the founder vs. non-founder differences. My “Early Analyses” post listed both the most significant drivers from my regression analyses of vesting periods and some of the not-significant factors. The core table from that post is reproduced here:

This post presents my initial interpretations (and those of the 2 entrepreneurs and the 2 VCs who contributed their insights in response to those posts), along with follow-up questions in italics below. As always, love to get your input on all of this!

Significant regression …

To complement the detailed early results, here are some high-level summary data on the years of vesting.

Across the full dataset (1163 executives from 225 companies), the range of years is 1 year to 5 years. The widespread rule of thumb is that vesting occurs over 4 years, and as expected, the most common period is 4 years. However, more than a quarter of executives (28%) have vesting periods different from that rule of thumb, which is what originally triggered the question for me of what was driving vesting terms.

More specifically, the average years of vesting is …

For people holding equity that has not yet fully vested: Does the vesting status affect your thinking about when you might leave your company?

For investors or CEOs: Are you worried that a key employee will leave your company when his or her equity vests?

Some background: My Founder Discount paper examined how founders’ “psychological handcuffs” affect (negatively) the amount of compensation founders want and/or can demand from their boards. Because these psychological handcuffs tie them more tightly to their companies, founders are much less likely to leave if they are being under-compensated. Therefore, founders are paid significantly less than

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