I think the same is true of equity compensation schemes.
I understand the theory of aligning incentives, but in practice what I see is a bunch of perverse results. Rest-and-vest as well as all sorts of non-useful stress in times like these.
I understand the theory of aligning incentives, but in practice what I see is a bunch of perverse results. Rest-and-vest as well as all sorts of non-useful stress in times like these.
For normal employees, it's just a form of pay with extra hoops. I suspect much of these started with ways to get "around" cash flow requirements, etc, but now the accounting rules have caught up and it's not really worth it anymore, for anyone.
I think a lot of people in the Bay Area who work at large and small companies have benefited from rising stock prices and large amounts of their pay being equity. Look at the price of Apple stock over the last few years. Even a normal IC at Apple has made significantly more money due to their equity compensation being granted over 4 years.
There are also many people who have been normal IC level employees at companies like Snowflake who gained tremendous wealth by them going public and being paid in equity. Sure there are some losers, but I think over a large sample size employees generally win by being paid in equity vs the cash price at the time equivalent.
It ALSO allows them to "pay" people the same even though total comp may be very different, (this looks good on reports about pay equality) AND it allows them to institute pay cuts without ever having official pay cuts.
What matters is expectations of profits going decades into the future and the relationship to the risk-free rate of return (which has risen dramatically recently, due to the expected future devaluation of the dollar).
(I mean, I know why; equity compensation is a much cheaper way for a company to compensate employees than extra salary or even bonuses.)
I think shared-success is a fair model (regardless of whether or not it's good for morale or productivity) when the company is small enough where you can at least somewhat understand how an individual employee's work contributes directly to revenue. But companies grow past that point, sometimes quickly.
Having said that, I think I made out very well with equity comp at my last company, much much better than I would have done if there was no equity comp, and we all just had higher salaries. But I think that outcome isn't common, especially when you only consider employees in non-executive positions.
The equity compensation at Apple is ridiculous. For one they're super stingy with it. Thanks to the infestation of stack ranking only the top quintile or quartile of employees on any team (by whatever performance metric the manager decides upon) will get any RSUs. Upper management has no problem if all the RSUs allotted for a team go to only a single team member. There's a reason Apple really hates the idea of employees talking openly about compensation amongst themselves.