Recently I have got an offer from instacart and it was mentioned I will not get any stocks if I leave before Ipo. Is it normal? I understand that there is 1 year cliff for stocks to vest and there is high probability instacart ipo will happen before that. Still want to clarify is it common with all instavart offers ? Also I bit concerned about instacart culture . Do they have stack ranking and pip culture similar to Amazon ? How common is layoffs in Ic ?
If they are doing RSUs and not ISOs then there is double trigger vesting. One part of that is the time element (similar to ISOs) but the second trigger is a liquidity event (IPO, merger, sale). Without the double trigger, you get nothing
What’s double trigger vesting?
Double trigger = you don't keep your rsu until both triggers have been met (a) 1 year and (b) company goes public. If they didn't have this clause you would owe taxes immediately when shares vested even though you wouldn't yet be able to sell the shares to pay your tax bill.
Sorry for my last of knowledge , I did not understand double trigger vesting part ..
Also is any one aware of performance evaluation process in Instacart and how frequent is layoff?
No layoffs dude!
Doesn’t seem like clawback is that uncommon in pre ipo companies. The research I did mentions it’s for tax reasons for Rsu vesting. Facebook did something similar “Double-trigger vesting solved a big problem for employees: how to come up with cash to pay taxes. In the Facebook case, the liquidity requirement was satisfied six months after the company went public, which coincided with the end of the six-month lock-up period. As is typical with IPOs, employees were not allowed to sell their shares until six months after the IPO. Because the second vesting condition was not met until six months after the IPO, no income tax was owed until then on shares that had satisfied the time requirement. Because employees were allowed to sell their shares six months after the IPO, they could raise cash to pay taxes by selling shares at that time.”
You are confusing double trigger with the new clawback clause. Prior to this year, the RSUs had the double trigger condition but you were still allowed to keep the time-vested RSUs if you left the company. This was true for other companies like FB, uber, etc. The new policy to clawback RSUs if you leave before IPO is new.
From what I read about clawbacks, if you leave you can still sell vested stock back to the company at preferred price.
Double trigger is not the same as what instacart is doing. Yes, with many RSUs the shares don’t technically vest until 6 months after ipo, but I’ve never heard of something where you don’t get to retain shares that meet the first vesting condition if you leave.
Im a bit confused. From my research a “clawback” is a double trigger + exit upon leaving company. Skype for instance had a clawback but what happened was that when employees were fired or left they STILL were able to sell their vested shares at the internal preferred price. Not sure about Instacart. A lot of clawbacks still mean you get your shares when you leave but you are forced to sell them at the preferred price rather than hold the shares
I just read about what happened at Skype and that is in regard to vested AND exercised options, which honestly is even worse. With RSUs in a private company, there’s nothing to technically claw back other than your future right to the shares. Either way, the idea of a claw back, whether with options or RSUs, seems highly unusual to me and borderline unethical. Prior to G, I worked at a unicorn that had double trigger RSUs and IPOed. If they had anything similar to what instacart apparently has in its offers I probably wouldn’t have joined.
https://www.duartefirm.com/single-post/2019/06/11/startup-employees-do-you-really-own-your-vested-shares In the offer letter it says “forfeit,” this article implies that a forfeiture is just a repurchase right that a company has. So do you actually really lose any money? “The net effect of a clawback provision is that it forces the sale of an employee’s vested shares back to the company.”
No, this is not common. Double-trigger RSUs are common (including with my company) but unlike at Instacart, you still get to keep your time-vested shares even if you quit the company before a liquidity event (second trigger).
I haven’t seen this before in previous company
T
https://www.google.com/amp/s/www.parkworth.com/blogs/pre-ipo-tech-giants-using-double-trigger-rsu-vesting%3Fformat%3Damp Facebook also did this, seems like it’s not that rare in unicorns?
“Double-trigger vesting solved a big problem for employees: how to come up with cash to pay taxes. In the Facebook case, the liquidity requirement was satisfied six months after the company went public, which coincided with the end of the six-month lock-up period. As is typical with IPOs, employees were not allowed to sell their shares until six months after the IPO. Because the second vesting condition was not met until six months after the IPO, no income tax was owed until then on shares that had satisfied the time requirement. Because employees were allowed to sell their shares six months after the IPO, they could raise cash to pay taxes by selling shares at that time.”