I got hired at a small startup (I'm on a team of 3, after another employee quit today) in April 2022 as VP of Operations. My Employment Agreement (EA) said I'd be paid $85k for the first year, then increase to $100k after one year. The EA also promised me “1% equity in the company, vesting monthly over 4 years with a 1 year cliff.” That is the entirety of the language the contract included about equity.
We are currently reorganizing the company. We operate two distinct legal entites, and we're merging them into one new entity. Last Friday, I was sent a Shareholder's Agreement (SA) to sign spelling out the terms of the distribution of shares. I was unhappy with the SA, because it seemed to effectively take away equity offered in my EA. Instead of offering me a fixed 1% of the company, the SA said I owned a specific number of shares. The crucial difference is that granting me a specified number of shares means that my ownership stake could be diluted in the future. The contract was also vague about the number of shares I own and the details of the vesting schedule. It didn't even specify anywhere that I'm supposed to own a total of 1% of the shares.
I brought this up to a coworker, VPSales, who is at the same level as me and has a very similar EA. We both got upset and brought these concerns up to our managers, CEO and Founder. CEO responded by posting this message in Slack.
'@VPOps '@VPSALES Good afternoon. I am sending this note on Founder's and my behalf. To be honest she is so upset and disappointed right she asks that she not respond until next week. Not great timing as she is about to [give a talk to 500 plus people]. I am happy to talk to you both individually or together. We are not at all on the same page around expectations, boundaries, and deliverables. I strongly believe we can work this out- I ask you both to think about a growth mindset and the amazing opportunity we are all working together on.
On Tuesday, CEO and Founder met separately with VPSales and myself. In both cases, CEO and Founder criticized our job performance and expressed shock and dismay that we were “asking for more.” I, in turn, explained to them that I wasn't asking for more. I was just asking for (a) an amount of equity equal to what my original EA promised and (b) that the language in the SA be clarified. Specifically, I asked for an anti-dilution clause for my 1%. They said no to that, and basically gave me an ultimatum: they told me I had to decide whether or not I wanted to stay with the company. I told them I'd think about it and get back to them by the end of the day today.
This morning, CEO had a one-on-one call with VPSales, who quit (due to a few problems he'd been having with the CEO and Founder in addition to the equity thing, which mattered less to him). CEO then called me, and we attempted to come to a compromise. She agreed to clarify the contract language, but did not agree to the anti-dilution clause. I was fine with that, and thought that we were about to come to a compromise and move past this whole ordeal, but then I asked her one last question.
I asked her for assurance that she would honor raise to $100k that was scheduled for April in my original EA. I know that I will have to sign a new EA with the new corporation, and given everything that's going on (and knowing CEO well), I figured she would attempt to deny me the raise. Turns out I was right. She told me that she didn't think my performance merited a raise, and that I could potentially still get it if I met expectations, but that she wouldn't commit to it. This outraged me, and I told her that I wouldn't abide it. She told me that, in that case, we should start planning for my transition out of the company. She sent me this email:
I am sorry that this is not working out. We need to build a transition plan ASAP. I am hoping you will consider staying on for a month as we transition. We could come up with a plan with deliverables and incentives. If a month is not acceptable, then I ask that you give us a minimum of 2 weeks.
Please let me know when you are ready to talk.
At that point, I jumped on another zoom call with her and we got into an emotional, heated discussion.
My position: I think I have performed well in my role, with a few definite shortcommings, and that she is arbitrarily cherry-picking those instances to deny paying me more. I run all the operations at this startup and started with nothing: no training, nobody else working here. I built it all from the ground up. I manage the finances, recruiting, hiring, HR, day-to-day operations, customer service payroll, etc., pretty much single-handedly. I work day and night and, for the last few months, have worked at least one weekend day every week and haven't taken a single holiday off. The work that I do is generally excellent, although I have made some significant mistakes and been late on a few important projects. I think she would agree with me on the facts. REGARDLESS, my original EA did not state that my raise was contingent upon performance in any way. At no time in the last ten months has the possibility that I wouldn't get this raise (based on performance or any other reason) been mentioned to me, and in recent months, we have worked it into our financial forecasting for this year.
Her position: I'm not honoring the EA by not meeting their expectations, so I don't deserve the raise.
I have another meeting with CEO and Founder scheduled for tomorrow morning. I don't expect it will go any differently. My ideal outcome would be to stay, get my scheduled raise, and carry on improving my own performance and helping build this company. But that doesn't appear to be what they want. I'm not sure whether we can move past this at this point. I know they've spoken to my part-time remote VA to see what parts of my job she could take on (CEO admitted as much to me, although I already knew this because I am shared on CEO's calendar and can see who she is meeting with). I see another couple meetings that look like job interviews, but it's hard to say whether those are for my position or VPSales's.
I would love to just quit immediately and make them feel the pain of losing me, but that would leave me in pretty dire straits financially (I would survive, but I'd probably have to go into debt), and I'm not sure I could get another job quickly, espcially given that I live in the Bay Area, and would be competing with tens of thousands of laid off tech workers newly on the job market.
Another potential solution I thought of proposing to them: I don't sign a new EA until April. Between now and then, we agree on some deliverables that would restore me to good standing. If, in April, they decide that they're still dissatisfied and don't want to give me my raise, then we'll part ways at that point. If everything is good, then I sign a new EA with a $100k salary and everyone is copasetic? Naive? Probably. As my buddy VPSales says, “I trust CEO and Founder about as far as I can throw them.”
Would love to hear this community's thoughts.