Vesting schedule question

[dholloway7]

@bmag777 What value do you provide to the equation?

 

[bmag777]

@sandra0003 Yes, I’m def feeling this pressure to not lose the guy because I lost 3 members of my board in the last 2 weeks, if I lose the cfo, it’ll be only me and CTO in the team. Hard situation we’re on.

I agree about the part that I’m kinda thinking of why the CFO is so interested in getting equity immediately but I’m considering his over 35 years of experience

 

[mat82]

@bmag777 Immediate vesting is stupid. He can leave a day later and keep it.

 

[bmag777]

@mat82 That’s what I’m thinking. Won’t accept it, it’s better to just fire the guy and get another CFO with over 15 years of experience being CFO of tech companies

 

[mat82]

@bmag777 How do you fire someone you haven’t hired?

 

[bmag777]

@mat82 Good question, I won’t officially hire him in the case. Will just say that I won’t continue with the vesting he is saying. I also don’t think he’s being honest about this

 

[esti]

@bmag777 OP it sounds like you are running a search fund. Very atypical to hire out a team like this prior to closing the company. Usually searches are run by teams of 1 or 2. You don’t know the needs of the business until you buy it - perhaps they already have a strong CTO or CFO, and those folks become redundant with the leaders you’re bringing in. Nonetheless, also very atypical to have the CFOs equity vest like that on close. You want at least 50% of their equity to vest over 4-5 years, otherwise they lose skin in the game.

 

[bmag777]

@esti Why a search fund? I’ve noticed that some guys I fired from my board were just talking a bunch of things and not doing the real thing, it was just talk and talk, that’s why I fired them. Yeah, I agree about the CFO equity vest. I’m not sure what the CFO is thinking about that but maybe just get another cfo who will accept the standard vesting would be a better option.

If I sign this with the CFO, he can get out of the business right after we buy the business and get all his equity. I don’t think that’s fair for me

 

[esti]

@bmag777 Google “GSB search fund primer”. What you’re talking about sounds a whole lot like this

 

[bygrace87]

@bmag777 7% is ridiculously high equity comp for a CFO.

The vesting schedule makes zero sense. A 4 year vest with 1 year cliff is standard, and your future investors will want to see this. It reflects negatively on you as a CEO if you do something like you're proposing. Why would you give up equity in your company to someone who can leave day one with shares and nothing to show for it?

Instead of trying to do something creative with your board go build a better product and get feedback from users.

 

[bmag777]

@bygrace87 Thanks for the feedback, it’s really helps. Also, I’m not the CEO of the company, I’m gonna hire a CEO too. Thinking about a 6% equity for the CEO maybe less than that.

Also being honest, I’m not trying to do something creative with my board, I’m just applying a method you don’t know it exists but it’s been working with many people for over 30 years. A curious fact: Bill Gates applied this on Microsoft, Elon Musk on Tesla and X, Richard Branson on Virgin and I can go on and on in this list.

The startup method YC teaches in their channel and program is way less validated than the one I’m applying in my company.

I’m gonna fire this CFO and get a new one. Im almost sure I can get a very good CFO for 4% equity and with the standard 4 year vest with 1 year cliff contract. I believe the guy is trying to basically “scam” me to get as much equity as possible.