Secondaries as Off-Balance Sheet Bonuses

Recurring secondaries turn private equity into usable pay, which lets late stage startups compete for talent without putting more cash expense on the income statement. Instead of promising one distant payday, the company lets employees sell a small slice each year as valuation rises. In the DoorDash example, that converts startup growth into annual cash payouts while employees still keep most of their upside.

• The key shift is from binary liquidity to gradual liquidity. Without a recurring program, employees either hold everything and wait, or try to sell all at once through ad hoc deals. With regular sales of 10% to 20%, equity starts to work more like an annual bonus plan tied to company performance.
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• This matters in recruiting because public companies pay more partly through liquid stock, not just salary. The report compares a $120,000 startup engineer package with public company compensation and shows that partial annual sales can narrow or close that gap, even before IPO.
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• It also improves retention and cap table health. Employees can fund real life needs, reduce concentration risk, and stay engaged, while the company controls who buys shares and how much trades. That is cleaner than unsanctioned brokered deals or one time tenders that push everyone to sell aggressively at once.
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The long arc is toward private companies building structured internal markets for their stock. As more firms stay private for 10 years or more, recurring liquidity will become part of standard compensation design, alongside salary and equity grants. The winners will be the companies that pair controlled employee liquidity with steady price discovery and stronger investor disclosure.