This is a plan that is much worse for employees, being presented as if it were better. At least be honest about feeling like you are paying employees too much equity up front and want to pay them less.
They say it protects against downside, but odds are if the company isn't doing well they'll cut the dollar value of annual bonuses as well.
They are paying people less because they want to keep them in the "golden handcuffs" for longer. The way it's painted by this particular VC is particularly gross.
Also executives usually keep the upside potential. So as an engineer if because of your work the company skyrockets and becomes 8x more valuable over the year you share 0% of that upside, while executives cash in. On the downside, as an engineer you can just leave because the market is very fluid, truth is you don't need job security from your employer if you are a good software engineer. If/when that changes probably compensation will go down enough so that this mega-grants are not going to be a problem anymore. They are just counting pennies.
If all they do is give you 1/4 of the equity they were going to give you previously, then yes it drastically reduces employee upside to the benefit of others (execs, investors).
But they probably can't do that because it would be harder for them to attract talent against a 4 year vest company. Instead they'll probably have to bump up that initial grant so that when employees do the math there is still the big upside if the company improves.