Traditionally, when a company decides to share equity with workers, it does it by creating a collection of shares/units/stock called a pool of equity. Most companies shave off a specific number of shares in the pool and reserve them for particular team members. In the past this has meant companies not being as generous as they want to be and holding equity back for fear of needing it later on/further down the line. This has created a scarcity mindset in negotiations because founders are afraid of running out.
Companies offering performance equity pools reserve a portion of shares in a pool but does not distribute them. Instead the shares are later distributed on a landmark event much more fairly based on a team member’s performance over the course of time. Performance equity pools have the advantage of being used before and after incorporation.
Restricted stock units (RSUs) are a way a team members can be offered equity to reward performance
RSUs are nearly always worth something, even if the stock price drops
The equity pool member does not receive the underlying shares, dividends or voting rights until the RSUs vest
The equity pool member receives a payout on a landmark event such as an IPO or an acquisition
Taxes are payable on the landmark event after a payout
Mastly’s RSUs mean that even after finishing their role the RSUs will vest with the equity pool
Top Fortune 1000 companies use RSUs to attract and retain their talent Mastly gives access to the systems that top companies have to everyone Companies such as Facebook, Amazon, Google, AirBnB, Dropbox and many others
Agreement between founders before they have incorporated the company
Agreement between the company and Mastly regarding the equity plan
Agreement between the company and the founders
Agreement between the company and advisors
Employment contract between the company and employee
Contract for services between the company and independent contractor
All team member legal agreements have non-compete and confidentiality clauses and protection for IP.
Other documents can be provided on request.
A landmark event is triggered when the Company is sold on the stock market or bought out privately. Alternatively an additional landmark event could be at the discretion of the company, for example, when the company reaches 100,000 users, or 1000 paying customers, or 300K in profit revenue, or goes viral.
On the achievement of a landmark event, equity can be distributed from the performance equity pool into team member’s common shares in the company. Landmark events which correspond to equity split should correlate with value growth or reduced risk of the company’s solvency.
In fact, we recommend not choosing an additional landmark event until the company has grown large enough that it can continue to grow self-sustainably as to reduce the risk of the company folding without further investment.
Complexity is reduced so it’s easy to administer and deal with
From a tax perspective there is nothing to do unless you receive a payout
RSUs vest in team members once the landmark event is triggered
Deferred compensation makes sure you don’t get taxed unless there is payout
Yes, for Founders and Advisors, please contact Mastly for further information.
Any! C Corp, S Corp, LLC, LLP and Sole Proprietorship.
Anyone! We have created the dashboard and legal documents on a “one-size-fits-most” ethos so it can be used by a startup or a big corporation.
No but RSUs are always worth something and don’t go “under water” like options can. They are also a lot simpler for owners to manage from a legal and tax perspective.
You will not receive as much cash immediately as you will effectively be banking some of your salary. You could potentially receive far more than you would have in cash through a landmark event.
Your company has offered you the opportunity to be part of an equity pool because they believe in you and would like you to be committed long term. Having said that people do come and go from companies and your efforts should still be rewarded. Mastly RSUs will still vest on a landmark event if you leave the company (unless you left due to a grievous reason).
RSUs are an industry standard and have been around for some time. Fortune 1000’s have been using performance allocation in conjunction with phantom equity for decades.
With access dashboards that show the value behind Mastly legal agreements, participants receive peace of mind as they see their equity grow in real-time and are motivated to powerfully pull for their company’s growth. Please see the Legal Page for reasons why Mastly RSUs are better than traditional options.