Comment by xyzzyz | Hacker News Reader

Comment by xyzzyz | Hacker News Reader

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Answers you got from astuyvenberg and eugenekolo are incorrect. That's not how it works.

The way it actually works is that when you join, you get a starting grant that vests over next 4 years, and then every year, you get a so-called refreshers, each of which is roughly a quarter of your original grant, which also vest over 4 years. This means that in year 4 of your employment, you get a (last) quarter of your original grant, along with a quarter of each of the 3 refreshers you received in the next 3 years. Then, in year 5, your original grant is gone, and you only get a quarter of each of the 4 refreshers you got in past 4 years.

Depending on the size of your original grant, and the size of refreshers, this can result in some pay cut in year 5. This pay cut can be bigger or smaller, depending on the size of your original grant, size of refreshers (which are driven by your performance rating/promotions), stock price in year 5 etc. However, other than some special circumstances where you get some additional discretionary stock grant, after year 5 you kinda reach a steady state, and your the value of your stock compensation can go down pretty much only if the stock price goes down (assuming constant performance over time).

You've identified the biggest cause, but there are other factors as well.

For example, refreshers are always granted at the end of the year and are only granted to employees that have been with the company a set amount of time. What this means is that new employees starting in the summer don't get a refresher until they've been with the company for ~18 months. So when their initial grant runs out, there's actually a gap of ~6 months where they are only earning equity from three grants while they would need four grants to fully match the equity they were earning during the prior period.

Also promotion at Google is not easy to get. The competition is stiff, the standards are high, and you have to manage to get assigned to the kind of tasks and projects that get you promoted. I saw great people sit at one level the whole time they were there.

The quest for a promotion-worthy project (that manages to ship, no matter the consequences) definitely drove some bad behaviors from people I worked with while I was there.

A weird fact about the universe: in a competitive environment, the difference between winners and losers is mostly luck.

It's always the network..

Just sayin'.

Hell even consumers see it. Messaging apps, for instance.

But given the explanation above, everyone would see a drop after year 4, regardless or promotions. If you happen to get a promotion and a big refresh perfectly timed with that initial grant ending, you may be able to level off the cliff, but that's just pure happenstance. If you had gotten the promotion grant a year sooner, you would've ended up seeing the drop the next year.

"Some special circumstances" can also mean where stock prices go down low enough to bring employees below their compensation target. It doesn't happen much lately at tech companies because the stocks are soaring, but it used to be more common. In those cases, many employees can receive more stock to bring them up to target. It puts a real and meaningful floor on stock price risk and is a nice fringe benefit for companies that do this.

> That's not how it works.

...okay, uh, except for when what they explained is exactly how it works.

Lots of people, at lots of companies, Google and Facebook included, get meaningful add-on grants, often larger than their initial ones.

These are frequently timed to the 4-5 year mark and especially handed out alongside promotions, for the exact reason that, otherwise, the employee will suddenly have a much lower annual payout and will be less 'aligned' with the with the company's future interest.

I'm not claiming that what you said does not also happen, but what the others said certainly does too, and there's no reason to phrase this as some sort of definitive-exclusive thing.

> Lots of people, at lots of companies, Google and Facebook included, get meaningful add-on grants, often larger than their initial ones.

This is I guess sort of true. They're certainly meaningful, it's unusual for them to reach the size of your initial grant quickly, and they'll usually trend upwards over time.

> These are frequently timed to the 4-5 year mark and especially handed out alongside promotions

This is empirically untrue.

It may be true at some companies, but it is rare enough to be a blip at Google or Facebook ("Discretionary Equity" is the term, and its very rare).

How these companies actually work is that there's a target stock grant at your level, let's say 50K. Your initial grant is larger (potentially much larger, depending on a number of factors, but usually 2-3x larger at a minimum). Higher performance increases the grant size, and promotion increases the target.

So there's nothing particularly timed specially at the 4-5 year mark that increases the grant size.

For reference, my stock grants (which are more or less typical) were ~130K at hire, 30K, promo 70K, 100K, 105K (I've reached the ceiling at my current level).

My 130K at hire was above average for a new grad, but an experienced industry hire could get 200K+, and still experience the refresh grants I got.

My employer (Google) has been giving me add-on grants for as long as I've worked there (over 11 years). The number of pre-vest shares have increased over time (they give me larger add-ons). The biggest hit I took was leaving to work for a startup for a year and then returning, because that reset everything. I walked away from some absurd amount of pre-vested shares.

I think my experience is fairly typical for senior/staff level employees with a long tenure, based on what I've heard from friends, coworkers, and HN comments.

Thanks; I appreciate a lot that you qualified what you said, and gave a justification for why your perspective is broadly true, rather than just assert a negative as a universal.

I was mistaken. I didn't know that FAANGs (and likely similar) mostly do comp in this specific way that is different from other comp structures I've interacted with or known of, even despite interning at Google myself, and having friends work there and at others similar, whom I've discussed comp with at length.

Somehow this point about stock grant structure has just never come up, and I've personally experienced the opposite, so I felt the strength of the assertion was unwarranted -- but anyway, I'm glad to learn it!

The best way to think of it is, FAAMG are money guns and your job is to build bullet-proof buckets.

FWIW, Google's vesting schedule is heavily frontloaded to reduce the "4 year cliff"

This is a recent change, and as far as I know, not yet true for all new hires.

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