This document outlines Wealthfront's equity plan to attract and retain employees. It discusses using equity incentives for new hires, promotions, performance bonuses, and evergreen grants. For new hires, it provides examples of equity budgets based on job role and market rates. It also discusses granting additional equity for promotions, using equity to reward top performers, and implementing evergreen grants to encourage long-term retention. The total estimated dilution for this example company is 3.945% per year, which is within the generally acceptable range of 3-5% dilution.

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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