I know some people, especially women, in this situation right now. They are under tremendous stress at work, sometimes marginalized or bullied. But they are forced to stick through it due to equity agreements.
Leaving means some wont see their equity grants vest. Some may be forced into major tax payments if they leave (due to options.) And some lose it alltogether. The way these things work, sometimes you end up paying enormous taxes and still end up with largely illiquid equity, which may remain illiquid for years. It is hard enough to land a job where the equity is worth something. People stick it out because a liquidity event can be life changing and liberating.
I realize equity agreements are created for retention, but they have the unfortunate impact of keeping people in jobs when it is better for both employee and employer to part ways. Something needs to be done about that. I don't know what.
I'm not really sure how you know my friend, or even which friend I'm speaking about, so I don't know how you'd know her situation. She's handcuffed because she's put in years of effort and hoping for a liquidity event before she leaves, lest she leave with little or nothing. She's miserable for entirely different reasons -- due to treatment she receives at work from what she tells me.
Not sure why this would be surprising -- this situation is very common across startups. I am a co-founder also, and I have equity vesting agreements, understandably, as I want retention; I don't want employees constantly leaving with the next wind that blows. At the same time, I'd hate to keep a miserable employee who isn't fully productive. I'd like to think I set a good enough workplace culture that there wouldn't be harassment/bullying, but who knows...
What is more wicked, and beyond me as a business owner, is US tax treatment on illiquid equity. That really needs to change.
>But they are forced to stick through it due to equity agreements.
That isn't what 'forced' means. Any of the people you are talking about could quit. They control their own lives and are responsible for them. Some theoretical equity in a company does not somehow hijack personal agency.
Leaving means some wont see their equity grants vest. Some may be forced into major tax payments if they leave (due to options.) And some lose it alltogether. The way these things work, sometimes you end up paying enormous taxes and still end up with largely illiquid equity, which may remain illiquid for years. It is hard enough to land a job where the equity is worth something. People stick it out because a liquidity event can be life changing and liberating.
I realize equity agreements are created for retention, but they have the unfortunate impact of keeping people in jobs when it is better for both employee and employer to part ways. Something needs to be done about that. I don't know what.