Trends in Compensation Packages

This might be a controversial hot take, but I don't think the idea of employee equity (in most cases) makes sense. After several experiences, including being an early employee at companies that have IPO'd through a SPAC and a founding member of a company that exited, my view on this has changed completely. I want to caveat, that I do believe, in many cases, equity packages make sense for senior executives and very early employees. However, for the most part, I believe equity compensation for junior and mid level employees in lieu of pay is a bad idea. A few reasons: 1) Misunderstanding Equity: Most junior employees have no idea what equity actually means. They believe that owning a piece of the company will make them rich upon an exit and that taking "more shares" in lieu of higher pay is a guaranteed payday. This is such a gamble and so misleading. Most companies don't exit. It's a huge risk that may never pay off. 2) Logistics of Options: Many junior employees don't understand the logistics of "options." While many of us know that being granted options doesn't mean owning them, this is typically elusive for younger, more junior employees. 3) Exercise Price, Spread, and Taxes: The reality of the exercise price, spread, and taxes makes it impossible for those who aren't wealthy to buy the options upon exit (within the typical time period). They are unaware that they will have to shell out a significant amount of money and feel the pressure of the clock ticking. 4) Stock Purchase Reality: When junior employees do make the purchase, they may not realize they are simply buying stock at a discounted price to what they believe the long-term value will be. This is equivalent to buying Meta stock at its IPO because you believe there is tremendous upside that isn't currently reflected in the price. This isn't to say that equity grants aren't great for senior executives and very early employees. It's to say that most people given equity simply don't have all the facts, and using it as a replacement for equivalent compensation no longer makes sense, especially in a cooler market where multiples are no longer 40x revenue. Happy to be challenged :)

4 year long grants are no longer the market standard–be very careful when looking at equity compensation benchmarks The simple way to do equity benchmarking is –1) Look at new hire equity target benchmarks –2) Use those benchmarks to directly inform your company’s new hire targets for total grant size But if you’re looking at benchmarks that mix 1, 2, 3, and 4 year grants into the same sample set, you’re at risk of mixing apples and bananas in a way that can substantially impact your equity comp accuracy and SBC over time. To take a step back, let’s take a look at how the market standards for equity vesting durations have evolved over the past five years for private and public companies across both new hire and ongoing (refresh) grants. _______________ 𝗧𝗵𝗲 𝗥𝗲𝘀𝘂𝗹𝘁𝘀 𝗳𝗼𝗿 𝗡𝗲𝘄 𝗛𝗶𝗿𝗲 𝗚𝗿𝗮𝗻𝘁𝘀: ↗️ 𝗣𝗿𝗶𝘃𝗮𝘁𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 => the average new hire grant has increased from 3.2 to 4.0 years from 2020 to 2025 ↘️ 𝗣𝘂𝗯𝗹𝗶𝗰 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 => the average new hire grant has decreased from 3.4 to 3.0 years from 2020 to 2025 _______________ 𝗧𝗵𝗲 𝗥𝗲𝘀𝘂𝗹𝘁𝘀 𝗳𝗼𝗿 𝗢𝗻𝗴𝗼𝗶𝗻𝗴 (𝗥𝗲𝗳𝗿𝗲𝘀𝗵) 𝗚𝗿𝗮𝗻𝘁𝘀: ➡️ 𝗣𝗿𝗶𝘃𝗮𝘁𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 => the average ongoing grant has stayed most flat at around ~3.5 years ↘️ 𝗣𝘂𝗯𝗹𝗶𝗰 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 => the average ongoing grant has decreased from 3.6 to 2.9 years from 2020 to 2025 _______________ 𝗧𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀: 1️⃣ 𝟰 𝘆𝗲𝗮𝗿 𝗴𝗿𝗮𝗻𝘁𝘀 𝗮𝗿𝗲 𝗡𝗢𝗧 𝘁𝗵𝗲 𝘂𝗯𝗶𝗾𝘂𝗶𝘁𝗼𝘂𝘀 𝘀𝘁𝗮𝗻𝗱𝗮𝗿𝗱. In particular, the average public company grant is now ~3.0 years in length for both new hire and ongoing grants. And even private company ongoing grants are averaging ~3.5 years in length these days. 2️⃣ 𝗣𝗿𝗶𝘃𝗮𝘁𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝘆 𝗻𝗲𝘄 𝗵𝗶𝗿𝗲 𝗴𝗿𝗮𝗻𝘁𝘀 𝗵𝗮𝘃𝗲 𝗺𝗼𝘀𝘁𝗹𝘆 𝗿𝗲𝘁𝘂𝗿𝗻𝗲𝗱 𝘁𝗼 𝟰.𝟬 𝘆𝗲𝗮𝗿𝘀 after a period of exploration with shorter grants during Covid and the ZIRP era. _______________ 𝗪𝗵𝗮𝘁 𝘁𝗵𝗶𝘀 𝗺𝗲𝗮𝗻𝘀 𝗳𝗼𝗿 𝗲𝗾𝘂𝗶𝘁𝘆 𝗰𝗼𝗺𝗽 𝗯𝗲𝗻𝗰𝗵𝗺𝗮𝗿𝗸𝗶𝗻𝗴: As mentioned above, the anti-pattern that I frequently see is when companies perform their equity comp market analyses on total equity grant sizes rather than annualized equity grants. This is the typical way of working with traditional survey providers, for instance. But it is a fairly substantial misstep given the now commonplace experimentation of varying vesting durations across the market today. When looking at equity benchmarks, 𝗜 𝘀𝘁𝗿𝗼𝗻𝗴𝗹𝘆 𝗿𝗲𝗰𝗼𝗺𝗺𝗲𝗻𝗱 𝗹𝗼𝗼𝗸𝗶𝗻𝗴 𝗮𝘁 𝗮𝗻𝗻𝘂𝗮𝗹𝗶𝘇𝗲𝗱 𝗯𝗲𝗻𝗰𝗵𝗺𝗮𝗿𝗸𝘀 and then backing into your company’s equity program (2 year, 3 year, 4 year, etc grants).

Happy #National401kDay! I’ve always enjoyed the philosophy behind choosing the Friday after Labor Day – start the week celebrating work, end it celebrating #retirement.    There will be a lot of focus today on how individuals can better invest for the future. But financial wellness can begin with employers, too. BlackRock’s latest Read on Retirement® survey reinforced that notion - so whether you’re a business owner, in charge of your company’s retirement plan or a people manager, here’s what workers are asking:     What’s your plan?  89% of independent savers without access to a workplace retirement plan said it was an important benefit when considering accepting a new job. And the same goes for a contribution match.    How am I tracking?  About 2/3 of workplace savers with a retirement plan say they would invest more in their 401(k) if their employee plan provided digital tools to tell them if they’re on track for retirement and that offer personalized investment recommendations.    Who do I trust?  For Gen Z workers in particular, the answer is: their employers. Over 70% say they trust their employer to help them determine how their savings should be invested and to make good decisions about their retirement plan investments.    Guidance and good decisions – I can’t think of a better gift employers can give their employees on 401(k) Day. 

Did you know that women in biotech and pharma earn just 88 cents for every $1 their male counterparts make? I've observed a troubling trend that may be perpetuating this gap. Over the past 6 months, I've documented 23 separate LinkedIn posts from professionals (all women, 21 of whom work in HR or TA) proudly announcing they rescinded job offers because candidates attempted to negotiate their compensation packages. What's particularly concerning is how this behavior creates a feedback loop 5 female candidates recently told me they were afraid to counteroffer specifically because they had seen these posts. Some wouldn't even allow me to negotiate on their behalf—despite knowing additional compensation was available. The data suggests a problematic dynamic When men negotiate, they're often perceived as "ambitious," while women displaying the same behavior are labeled "difficult." This cultural difference starts early in how we socialize children and carries through to professional environments where it manifests as tangible financial disadvantages. As recruitment partners, we have a responsibility to recognize these patterns. Negotiation is a standard part of the American employment process—not a character flaw or sign of disloyalty. When TA professionals (especially those with SHRM credentials or who champion DEI initiatives) brag about punishing negotiation attempts, they're actively suppressing women's wages and contradicting their stated values. For hiring managers and companies How are you ensuring your compensation practices aren't inadvertently reinforcing gender pay disparities? Are your recruiters and HR teams trained to recognize these biases? For candidates, Negotiation is your right. If an offer is rescinded solely because you respectfully inquired about compensation adjustments, that's a significant red flag about company culture. What steps is your organization taking to ensure fair compensation practices across gender lines? I'd love to hear your thoughts. #BiotechEquity #FairCompensation #RecruitmentBestPractices #GenderPayGap #TalentAcquisition

Synchronizing executive pay with performance is not new, but it is nuanced—especially when it comes to DEI performance. Here’s what I mean: 1️⃣ Sandbagging: Are companies deliberately setting low or easily achievable #diversity targets? 2️⃣ Performative metrics: Are the #DEI targets simply forward-facing manifestations of what the company was already planning to undertake? Performative diversity compensation doesn’t bode well at a time when the CEO to unskilled worker pay ratio is 354:1 3️⃣ Size of compensation: What percentage of executive pay is linked to DEI goals? 10 to 20% seems to be the sweet spot for many companies. Below 5% of a short-term incentive plan seems ineffective at catalyzing meaningful change. 4️⃣ Time horizon: Are DEI goals linked to short-term incentive plans like the annual bonus, or long-term incentive plans—which hold more weight as a percent of total compensation? The latter is more conducive to sustainable value creation vis-à-vis DEI. 5️⃣ Types of metrics: What metrics are you using? And how are you measuring them? For DEI metrics to be meaningful, they need to go beyond employee representation and account for equity of opportunity, equity of pay, and equity of performance. They also must be disaggregated by gender PLUS race/ethnicity PLUS age. (#intersectionality matters) 6️⃣ Tyranny of the metrics: The wrong metrics can undermine progress. One study found that companies seeking to increase the representation of women in leadership overpaid high-potential women in an effort to meet their DEI targets. It came at the sacrifice of women in all other ranks who continued to experience inequity. 👉🏽 Final thoughts: We must continue monitoring this space to ensure the companies that tie executive pay to DEI targets can sustain their progress in the long run. More in my latest op-ed for Fast Company. #BeBrave #EquityforAll #intersectionality #genderequity #racialequity #CEO #DEI #D&I #diversity #equity #inclusion McDonald's Salesforce Microsoft Starbucks Lydia Dishman

Work-life balance just beat salary as the top factor in job decisions for the first time ever. The corporate world is having a panic attack. After years of RTO mandates from J.P. Morgan, Barclays, and Amazon, people are finally saying: "I don't care how much you pay me if you're going to burn me out." The companies getting this right aren't just offering unlimited PTO. They're creating cultures where taking time off is actually encouraged, not guilt-tripped. Zapier requires a two-week vacation minimum. OLIPOP PBC gives a paid Summer Recharge week. Chime offers monthly "Take Care of Yourself" mental health days. Meanwhile, 77% of workers are experiencing burnout, and 61% say their employers don't offer real mental health support. The math is simple: if 94% of employees say balance matters when evaluating jobs, and you're still treating wellness like an afterthought, you're going to lose talent. The companies that win in 2025 won't be the ones with the highest salaries. They'll be the ones that treat their people like humans first. Full breakdown here: https://lnkd.in/eZAsw6G3

Mastercard has agreed to pay $26 million to settle allegations that it systematically underpaid thousands of female, Black, and Hispanic employees. The settlement resolves claims that the company underpaid 7,500 female, Black, and Hispanic workers compared to their male and white counterparts for performing the same or similar work. As this case illustrates, allegations of systemic pay discrimination hit hard—financially and reputationally. As an employer, you can and should take steps to ensure fair pay practices. Not only because it's the right thing to do, but because it's critical to avoid costly lawsuits and foster a workplace of trust and respect. Here are 5 practical tips to get it right: 1. Audit Your Pay Practices: Regularly conduct pay equity audits to identify and address disparities. Ensure employees are compensated fairly, regardless of gender, race, or ethnicity. 2. Standardize Compensation Policies: Create clear, objective pay structures. Define pay ranges for each role and base increases on measurable performance metrics. 3. Train Your Managers: Educate managers and HR teams on unconscious bias and equitable pay practices to prevent unintended discrimination. 4. Be Transparent: Share pay ranges in job postings and salary discussions. Transparency builds trust and reduces misunderstandings about compensation. 5. Document Everything: Keep detailed records of pay decisions and their justifications. If a lawsuit ever arises, you'll have evidence to support your practices. The takeaway? Prevention is always cheaper—and smarter—than litigation. Invest in fair pay practices now to save yourself headaches, headlines, and your hoard of cash.

Base salaries are on the rise for specialized roles 📈 Amazon’s move back in 2022 to lift its base salary cap from $160,000 to $350,000 now looks prescient. High cash bases have become a defining feature of today’s most competitive offers for specialized AI engineers. When that memo went out three years ago, many read it as a defensive tactic to slow attrition, and increase overall retention. In hindsight it was an early signal that the market ceiling on guaranteed pay was about to shift upward, and rival employers have since followed the same trajectory. The main driver is talent scarcity. Generative-AI road maps depend on a narrow pool of engineers who can translate research advances into production systems, and the supply of that talent has not kept pace with demand. Recruiters therefore compete on the only lever that closes quickly: more upfront cash. The talent gap is the biggest brake on AI execution, underscoring why companies are willing to stretch base pay well above the old ~$200k commonly understood ceiling. And with increasing expenditure on training frontier models, employee expenses are very marginal in comparison, which provides much more room for pay to grow. Private companies add another push. With IPO timelines uncertain, equity remains largely illiquid, so late-stage startups and growth-stage AI labs shift a larger share of total compensation into salary. Structured tender offers and secondary-market programs now provide partial liquidity, yet these events clear only a fraction of shares and occur on company schedules. A bigger paycheck that arrives twice a month is still the clearest way to win a bidding war for scarce talent. Curious what others are noticing out there in the market, would love to trade notes. Below is an Anthropic engineer data point with a $320k base: https://lnkd.in/gF6vh9BZ

Over the last few weeks, there have been multiple leaders in our network asking about equity vesting schedules and if we’re seeing any trends. Here’s what I’ve hearing from leaders in our community: 👉 Private companies are evaluating shorter vesting schedules, but few are executing on these ideas due to the legal and admin challenges of changing equity plans. 👉 Bottom line: there is increasing pressure from Boards to limit dilution rates and burn, but Pre-IPO Tech companies are sticking to the typical 4-yr vesting schedules with 1-yr cliff for new hire grants and refreshes with monthly vesting over two years with no cliff. However, alternative approaches by 'outlier companies' are emerging. ➡ Stripe, Lyft, and Coinbase adopted one-year vesting schedules (https://lnkd.in/eYKv_vGB) ➡ OpenAI has PPUs that provide employees with a % of profits ➡ Pinterest and DoorDash have front-loaded splits over 3 and 4 yrs respectively, which is in contrast to Amazon’s back-loaded splits Why would companies consider shorter term vesting schedules? Companies move to a shorter term to reduce their 'stock based compensation' expense or burn, but a flaw can emerge if companies go this direction and commit to fixed annual grant values. If the stock price significantly declines, the company will be need to issue more shares to deliver the same value. How do you stay informed of trends? There are well established benchmarking providers for different forms of cash compensation like Radford for broad based compensation, Compensia for executive compensation, and Alexander Group for sales incentive compensation. Equity benchmarks can be much more elusive… especially for private companies. The good news is that there are now compensation platforms like Kamsa, Complete (YC W22), Pave, Compa, and Levels.fyi that help to understand what’s going on in your company and in the market. VC firms share insights from portfolio company surveys like the General Catalyst survey on equity refreshes (credit to Guissu Baier): https://lnkd.in/eniMAPNu So how do you make sense of all of this as a talent leader? 1️⃣ Be curious and learn about different aspects of equity. ⭐ Options vs RSUs: https://lnkd.in/e3HESBXN ⭐ PPUs: https://lnkd.in/ezdRkjtn ⭐ Traditional vesting schedules: https://lnkd.in/ePB2ZQqn ⭐ Unique vesting schedules: https://lnkd.in/eUrDZCUe ⭐ Preferred vs 409A valuation: https://lnkd.in/e3x7w72s 2️⃣ Stay on top of trends from competitive offers, track them, monitor impacts to offer acceptance rates, and most importantly partner with your Comp team as your company designs its program for new hires and employees. 3️⃣ Build your network with other talent leaders. 4️⃣ Follow leaders that are sharing insights on how the market is evolving like Charlie Franklin (CEO at Compa), Matt Schulman (CEO at Pave), and Zuhayeer Musa (Co-founder at Levels.fyi).

Carta's H1 2024 data confirms companies have become leaner and salary benchmarks have remained flat across much of their ecosystem. Here are my key takeaways from Carta's latest data release: 🗒️ Salary and equity stability: Salaries and equity for new hires have stayed unchanged since September 2023. This suggests a new normal for compensation packages, following significant drops in previous years. 🗒️ Hiring trends: Hiring activity has not picked up. January through April 2024 saw fewer new hires than any corresponding months in the past four years. Total net headcount remained flat. 🗒️ Decline in Layoffs: Although layoffs are still occurring, the number of monthly job departures has steadily declined this year, which feels like progress. 🗒️ High turnover in recent hires: Nearly a quarter of employees hired in 2022 left their company before their first work anniversary, which is super costly to companies. 🗒️ Geo-located compensation: Smaller startups are more likely to adjust pay based on location. Nearly 90% of startups valued under $25 million do this, compared to 71% of companies valued at $1 billion or more. Also, 41 of 54 major US markets saw startup pay move closer to the top market rates, with big jumps in midwest cities like Columbus and Cincinnati. Leaner teams and flat pay packages show that companies have become far more intentional with their finances given this economy. As Peter Walker says, "Bragging rights have very quickly moved from "total employees" to "revenue per employee". It will be fascinating to see if startups can hold onto these more fiscally responsible practices if and when larger financing rounds return. Note: Don't miss the addendum that includes updated benchmark equity values for advisors, early employees, and startup board members. The full report is linked in the comments below 👇