1. Wealthfront Equity Plan
Playbook for Owners
March 8, 2016

2. How do you attract and
retain the best employees?

3. CHALLENGING
WORK
ENVIRONMENT
ENGAGING
CULTURE
COMPELLING
EQUITY
INCENTIVES
1
2 3

4. Equity incentives must both
ATTRACT NEW
EMPLOYEES
RETAIN
OUTSTANDING
EMPLOYEES
AND

5. Plan approach must be
rational and equitable

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Over the past 25 years…
• Our founder, Andy Rachleff, designed a plan that accomplishes
both goals at an appropriate level of dilution
• The plan has become known as
The Wealthfront Equity Plan
• Simple, transparent & fair, it has now been adopted
in various forms by a number of companies at
varying stages.

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Example: Startup in Hypergrowth
• Company
• Consumer internet
• 50 employees
• San Francisco Bay Area
• Staffing Goal
• Grow employee base to 100 by end of the year

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

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

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New Hire Grants
• List all functions & expected
number of people to be hired
• Next, determine the market rates
to hire these individuals
• Let’s look at some examples

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New Hire Scenario #1

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New Hire Scenario #2

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New Hire Scenario #3

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Example New Hire Budget
Create an “equity budget” to calculate total dilution for new hires

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

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Promotion Grants
• Employees who have been
promoted need to be at market
rate for their new position
• Two scenarios
• The person being promoted
has equity below today’s
market rate
• The person being promoted
has equity above today’s
market rate.

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Promotion Scenario: Employee has less equity

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Promotion Scenario: Employee has more equity

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Example Performance Budget

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

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Performance Grants
• Give additional equity to a limited
number of people to reward
performance (Top 10-20%)
• Bump needs to feel large, but
maintain equitable nature of the
entire plan
• 50% of equity grant for their
current role, if hired today

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Performance Scenario

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Example Performance Budget

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

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Evergreen Grants
• Goal is to retain employees for
the long term
• Avoid vesting cliffs so employees
to avoid artificial anxiety points to
stimulate interest in new
opportunities

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Evergreen Scenario

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Evergreen Scenario
• Start offering additional grants at
2.5 years. Predictable.
• Give 1/4 of current market offer
for their current role / title.
• In this case, 0.018% per year
(0.07% ÷ 4)
• Vests over 4 years
• Grant every year avoids cliffs

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Evergreen Example Budget

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

30. Total Dilution
3.945%
(well within acceptable range of 3-5%)

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