Wealthfront Equity Plan

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Wealthfront Equity Plan
Playbook for Owners
wealthfront.com

How do you attract and
retain the best employees?

CHALLENGING
WORK
ENVIRONMENT
ENGAGING
CULTURE
COMPELLING
EQUITY
INCENTIVES
1
2 3
ATTRACT
RETAIN

Equity incentives must both
ATTRACT NEW
EMPLOYEES
RETAIN
OUTSTANDIN
G
EMPLOYEES
AND

Plan approach must be
RATIONAL & EQUITABLE

Over the past 25 years…
6
 Our founder Andy Rachleff
designed a plan that accomplishes
both goals at a level of dilution ...

 Company
– Consumer Internet
– 50 employees
– San Francisco Bay Area
 Staffing Goal
– Grow employee base to
100 by end o...

A compelling equity compensation plan
has four types of grants:
PROMOTIONS PERFORMANCE EVERGREENNEW HIRES

Let’s first focus on new hires:
PROMOTIONS PERFORMANCE EVERGREENNEW HIRES

 List all functions and expected
number of people to be hired
 Next, determine the market
rates to hire these individual...

11
CASH $ in Thousands
SF Bay Area
Per
centile
Sala
ry
Equ
ity
75
th
$1
30k
0.1
05%
25t
h
$11
4k
0.0
36%
Startup Compensat...

12
CASH $ in Thousands
SF Bay Area
Per
centile
Sala
ry
Equ
ity
75
th
$1
28k
0.1
05%
25t
h
$1
03k
0.0
12%
Startup Compensat...

13
CASH $ in Thousands
SF Bay Area
Per
centile
Sala
ry
Equ
ity
75
th
$2
33k
0.0
86%
25t
h
$1
05k
0.0
04%
Startup Compensat...

Repeat This Process for All Hires Listed
Create an “Equity Budget” to Calculate Total Dilution for New Hires
14
Function H...

Next, let’s focus on promotions:
PROMOTIONS PERFORMANCE EVERGREENNEW HIRES
1.92%

 Need to give employees who have
been promoted the amount of stock
necessary to get them to the market
rate for their new...

17
CASH $ in Thousands
Promotion Scenario 1: Below Market
Software Engineer Manager 51 - 100 SF Bay Area
JOB FUNCTION JOB ...

18
CASH $ in Thousands
Per
centile
Sala
ry
Equ
ity
75
th
$1
30k
0.1
05%
25t
h
$11
4k
0.0
36%
Promotion Scenario 2: Above M...

Example Promotion Increase
19
To Be Promoted Starting Equity Market Rate for
Promoted Position
Additional
Grant
Engineerin...

Now let’s focus on performance:
PROMOTIONS PERFORMANCE EVERGREENNEW HIRES
1.92% 0.5%

 Give equity bumps to a limited number
of people to make it seem special
– Only the top 10-20% employees
 Need to give a...

22
CASH $ in Thousands
SF Bay Area
Per
centile
Sala
ry
Equ
ity
75
th
$1
75k
0.1
76%
25t
h
$11
8k
0.0
45%
Performance Scena...

Example Performance Increase
23
High Performer Today’s Market Rate Additional Grant (50%)
Software Engineer 0.11 0.055
# o...

Finally, let’s focus on evergreen:
PROMOTIONS PERFORMANCE EVERGREENNEW HIRES
1.92% 0.5% 0.125%

 Goal: retain employees for the
long term
 Avoid vesting cliffs so they
don't look around for new
opportunities
Evergreen

26
CASH $ in Thousands
SF Bay Area
Per
centile
Sala
ry
Equ
ity
75
th
$1
30k
0.1
05%
25t
h
$11
4k
0.0
36%
Evergreen Scenari...

 Start offering additional stock
at 2.5 years
 Give 1/4 of current market offer for their
current job each year on anniv...

Example Evergreen Increase
28
Level Evergreen
Grants
Average Incremental
Grant / Level
% Granted
Per Year
Additional
Grant...

Add up all grant dilution
PROMOTIONS PERFORMANCE EVERGREENNEW HIRES
1.92% 0.5% 0.125% 1.4%+ + +

(well within acceptable range of 3–5%)
Total Dilution:
3.945%

Wealthfront.com

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