Fewer Than 10 Percent of Startup Employees Complete 4-Year Vesting

Pop quiz - how many startup employees stay at a company for 4 years?

If you guessed less than 10%, congrats, you win (gift is in the mail, I promise).

Of course the 4-year timeframe is important because that's almost always the full vesting period of an employee's option grant. 90%+ of employees we see on Carta receive a 4-year vest, 1-year cliff.

Why does this matter?

Well, from the employee perspective, it means you should expect to face an acute decision around exercising your startup options.

When you leave, you'll likely have 90 days to choose to exercise (meaning having to pay to buy those options now in the hopes they become more valuable in the future). Or you could exercise them over time as they vest - but few take this route, either by choice or through lack of knowledge.

From the employer perspective, the rest of the chart is perhaps more important.

64% of startup employees have been at their current company less than 2 years.

So many decisions stem from this tenure expectation:

• How do you manage knowledge transfer, especially in high-turnover roles?

• How do you mitigate against key person risk (not just the founder, but founding employees in each department)?

• How do you incentivize top performers as they approach their 2-year mark, never mind the 4-year one?

Realistic expectations about tenure, for both the employee and employer, can make the inevitable transitions between team members much easier!

Digging back into everything Carta knows about startup employee compensation. Our big State of Startup Compensation report comes out next week, sign up at the link in graphic in order to receive a copy in your preferred inbox.

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