> If you have any pending or promised equity grants you haven’t already taken care of before you start your Series A process, do that ASAP.
Huh? Seriously? If someone promises me equity I expect that finalized within weeks. How many companies just have promised equity sitting around without the paperwork being done?
Edit:
Some super good points about board approval. Most of the company's I've worked at have the rules of the options pool voted on by the board but the grants can be given out without board approval (as long as they were the standard new hire grant and nothing unusual). But I can see how if something like that isn't in place it could take a while.
It happens. Option grants require board approval or are sometimes waiting on new 409a valuations. It would be nice to turn them all around quickly but it’s not always feasible. The advice quoted is good advice.
I'd like to add the word "can" in there. "Equity grants [can] take months." They shouldn't though. They can take as little time as it takes the president or CEO to hit the "print" button and get out a pen if the rules are laid out clearly and voted on ahead of time by the board.
All three startups I have been involved with have had board-level approval for individual equity grants. I have never seen any real push-back on them, but I have also never heard of the board relinquishing control over something so vital.
The employment contract guarantees the equity subject to board approval. I'm not quite sure why people are making such a big deal out of this.
What you describe is certainly common. I have a different experience and I like what I have seen better.
> The board agrees all new employees get X options with a 1 year cliff and 4 year vesting without additional approval so long as total options granted does not exceed Y.
The board only needs needs to be involved if X or Y need to be changed.
Having the board bother themselves with every little hire is just ridiculous. They have better things to do. Plus if the options are defined on paper the company can't be accused of favoring certain classes of employees differently.
The best option at that point is to quit and make public the breach of contract. Don't do business with unethical people or organizations it's simply not worth your time.
I would be very careful about making the breach of contract public. Companies tend to have better paid lawyers and bigger pockets than individuals. Unless you are in a position where you can't be touched (for instance: because you are broke or in a different jurisdiction) this is a risky strategy.
First sueing an ex-employee is a massive reputation hit.
An employee who fails to receive full compensation can receive free legal help from a range of organizations with very deep pockets. In many situations companies have a significant advantage, but in this case they really don't.
Sure, people and companies may be completely irrational, but competent legal advice will tell them to leave this one alone.
At a recent job, my option grant wasn't official until approved at the next quarterly board meeting. There was about 2 months delay (but it also didn't impact me as it wasn't between any "material events").
How many companies just have promised equity sitting around without the paperwork being done?
This is just pure dishonesty. I know folks who have said things like this and I A.L.W.A.Y.S. say "Sure for now send me a text message or email until we can get to documents." Sure enough I have never gotten a text or email or anything in writing.
People/companies who are serious will take an action and tell you exactly when (in the next few days) this will be handled and how.
> If someone promises me equity I expect that finalized within weeks. How many companies just have promised equity sitting around without the paperwork being done?
The answer is : tons. Most startups I've worked for do option grant approvals quarterly or thereabouts. But I think it would be unethical to approve grants at a different price or size than promised in an offer. Sure you may have been diluted by then, but you wouldn't have had any say in it any way and the idea is that subsequent dilutions are good for you as they reflect a growing value. That's the IDEA anyhow.
> If you have any pending or promised equity grants you haven’t already taken care of before you start your Series A process, do that ASAP.
Huh? Seriously? If someone promises me equity I expect that finalized within weeks. How many companies just have promised equity sitting around without the paperwork being done?
Edit:
Some super good points about board approval. Most of the company's I've worked at have the rules of the options pool voted on by the board but the grants can be given out without board approval (as long as they were the standard new hire grant and nothing unusual). But I can see how if something like that isn't in place it could take a while.