Compensation packages at XMTP, Inc. have both a salary and equity component. Owning equity in the company represents an opportunity to share in upside that might be achieved should we accomplish our goals as a team. We believe that it’s important for team members to have a sense of ownership and pride in the work they’re contributing, and equity is a great way of achieving that.
At early stage startups, stock options typically “vested” over a period of time. This means that while there is a certain amount of stock set aside as compensation, it does not all arrive at once, but is earned over time.
We have a traditional four-year vesting schedule, where 1/48th of the stock will accrue each month.
Note: In a typical startup, a vesting schedule typically comes along with a “cliff” which means that for the period of a year no stock accures, but a large chunk is received immediately following that first year. However, we don’t think this properly aligns incentives and so we’ve eliminated the cliff. You can read more on that in our blog post .
At XMTP, we give equity grants in the form of Non-Qualified Stock Options. These are called options because it gives you the option to purchase stock at the rate set at the time of hire later on down the road, subject to vesting terms. For example, if when you are granted options they are priced at $0.10/share, and XMTP later grows such that its common stock is worth $1.00/share, you can still purchase your options at $0.10/share.
If you’d like to learn more about how exercising your options might impact you, please reach out to your Northstar advisor.
The standard operating practice in startups is to offer a 90-day window to exercise stock once a person has departed a company. We recognize that this could create an untimely or untenable burden, which may lead people to be unable to exercise their options and miss out on any future upside in the company. For those that are leaving the company on reasonable terms we believe there’s a better way to do this.
For those that qualify, XMTP, Inc. offers an exercise period equal to the number of months that their stock had vested at the company. So in this example if you’ve stayed for two years, you’d have two years from the date of departure to exercise your options.
To be clear on what constitutes leaving on “reasonable terms,” it’s largely based on our “How to Quit” guidelines, with a couple additions:
- Have early conversations with whomever you report to, letting them know about how you’re feeling about things, and if you’re inclined to consider leaving. If you’re uncomfortable in having that discussion with them, you can communicate that to People Ops.
- If you do intend to leave, communicate that in a live discussion with whomever you report to, or someone in People Ops. This should take place no less than 3 weeks prior to your intended departure.
- Ensure that you’re leaving with a clear transition plan in place so that process can meaningfully continue for the things you have been working on.
Above all else it comes down to communication. If you’re communicating sufficiently with the necessary individuals and teams, and you’re not leaving for a competitor, you’d qualify for extended exercise.
Note: Anyone terminated for-cause would not be eligible for extended exercise.