This document outlines Wealthfront's equity plan to attract and retain employees. It discusses using equity incentives for new hires, promotions, performance bonuses, and evergreen grants. For new hires, it provides examples of equity budgets based on job role and market rates. It also discusses granting additional equity for promotions, using equity to reward top performers, and implementing evergreen grants to encourage long-term retention. The total estimated dilution for this example company is 3.945% per year, which is within the generally acceptable range of 3-5% dilution.
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Over the past 25 yearsâŚâ¨
⢠Our founder, Andy RachleďŹ, designed a plan that accomplishes
both goals at an appropriate level of dilution
⢠The plan has become known asâ¨
The Wealthfront Equity Plan
⢠Simple, transparent & fair, it has now been adoptedâ¨
in various forms by a number of companies atâ¨
varying stages.
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Example: Startup in Hypergrowth â¨
⢠Company
⢠Consumer internet
⢠50 employees
⢠San Francisco Bay Area
⢠StaďŹng Goal
⢠Grow employee base to 100 by end of the year
8. A compelling equity compensation plan
has four types of grants
PROMOTIONS PERFORMANCE EVERGREENNEW HIRES
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New Hire Grants
⢠List all functions & expected
number of people to be hired
⢠Next, determine the market rates
to hire these individuals
⢠Letâs look at some examples
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Promotion Grants
⢠Employees who have been
promoted need to be at market
rate for their new position
⢠Two scenarios
⢠The person being promoted
has equity below todayâs
market rate
⢠The person being promoted
has equity above todayâs
market rate.
20. Now letâs focus on performance
PROMOTIONS PERFORMANCE EVERGREENNEW HIRES
1.92% 0.5%
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Performance Grants
⢠Give additional equity to a limited
number of people to reward
performance (Top 10-20%)
⢠Bump needs to feel large, but
maintain equitable nature of the
entire plan
⢠50% of equity grant for their
current role, if hired today
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Evergreen Grants
⢠Goal is to retain employees for
the long term
⢠Avoid vesting cliffs so employees
to avoid artiďŹcial anxiety points to
stimulate interest in new
opportunities
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Evergreen Scenario
⢠Start offering additional grants at
2.5 years. Predictable.
⢠Give 1/4 of current market offer
for their current role / title.
⢠In this case, 0.018% per yearâ¨
(0.07% á 4)
⢠Vests over 4 years
⢠Grant every year avoids cliffs