I'm pretty sure the equity I have is already incredibly generous for an employee. But yes, I did bring up the issue a couple weeks ago. He doesn't believe we're in a position to go to the board and make any changes to stock compensation at this time. He thinks we should first figure out how to accelerate (with this new project) and then we'd be in a better position to ask for more stock for employees from the board.
If the founders control the company, then they can dictate the terms of employee compensation. To a degree at least... I guess they cannot unilaterally make decisions that completely piss-off and alienate their investors, or good luck with series B.
If the VCs control the company, then I'm sure their response would be "we offer industry standard x% of equity, so there's no reason to offer more".
Chicken and egg problem. It won't change until someone changes it.
Another thought: Where would the increase in employee equity come from? Would the founders dilute their share, or expect all shareholders to dilute? If it's just the founders deciding to be more generous, then why should the board have a problem?
The board should be absolutely in favor of founder-only dilution, since it costs other investors nothing, and ostensibly results in a more motivated workforce.
So your description of his response really struck a nerve with me. The founder is the leader of the company, not the board, and the founder(s) regularly give up equity in order for a company to be successful. Yes, it might require board approval, but passing the buck to the board like that is inappropriate.
The matter at hand is: does he believe you deserve more equity at this point in time? If yes, then commit to fighting for you (and if equity is somehow impossible, explore other options). If no, explain why & how to improve.
To be fair, nobody is perfect in every interaction, and there are a million rational reasons why a founder would sidestep a question like that (terrible board relationship, you or others at the company have a hard time hearing negative feedback, distracted that day, etc.). If you feel like the matter wasn't resolved to your satisfaction, it is worth bringing back up.
Your equity isn't "incredibly generous" for a startup in your position, where you are the 2nd engineering hire, the team is still a handful of engineers, and you're likely going to see more dilution (unless you close shop before).
Practically, from what you describe (startup not doing very well after 5+ years of active development), I'd be very surprised if you see any serious money from that 1.8%.
> He doesn't believe we're in a position to go to the board and make any changes to stock compensation at this time.
The board isn't some harsh unreasonable committee. They would quickly grant you equity if they thought it was important enough to do so.
This really is a BS excuse. He basically told you "I don't want to give you more equity, and I'm going to blame it on some external entity rather than own up to it".
That 1.8% figure I gave includes shares that have not vested yet. My original stock compensation was significantly smaller. I've received small stock option bumps over the years, including a significant one last year. I have about half of my total shares vested today, and I won't be fully vested until 2021.
