Equity comp trends in AI engineering with Terry Adamson

As the demand for top AI and ML talent continues to grow, companies face the challenge of offering competitive equity packages while managing share dilution and burn rates. 

We recently had the pleasure of hosting Terry Adamson, Managing Partner at Infinite Equity , to talk about the evolving landscape of equity compensation for AI and machine learning engineers. 

Terry, with his extensive experience advising public and private companies on equity strategies, valuation, and share management, offered his perspective on how organizations can navigate these questions. 

The conversation explored emerging trends in equity comp for AI roles, the strategic decisions companies must make when determining equity pool sizes, and the best practices for retaining top AI and ML talent. 

Terry and Charlie agreed that as the AI field evolves, so must the approach to equity compensation, with companies needing to maintain the right balance between attracting talent and meeting broader business objectives. 

Terry’s insights serve as a blueprint for tech organizations looking to become or stay competitive in attracting and retaining the top AI and ML talent. 

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Mastering the complexities of equity comp for AI engineers

One of the main challenges Terry and Charlie discussed revolved around designing equity comp packages for AI and ML engineers. 

As companies battle to secure top talent in these fields, they often find themselves challenged by the limitations of their existing equity pools. 

Terry pointed out that while larger companies have the advantage of more resources, they also face greater constraints due to burn rate restrictions and corporate governance requirements. 

The key to navigating these challenges, according to Terry, is to “do more with less”. 

This way, companies can focus on creating opportunities that maximize the perceived value of equity grants. 

One strategy Terry shared was allowing employees to choose between stock options and full-value shares. This increases engagement and helps in tailoring compensation packages to individual preferences. 

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Empowering talent with equity choice programs

A big portion of the discussion was dedicated to the concept of equity choice programs. Terry explained how these programs, which allow employees to choose between different types of equity awards, can be a game-changer. 

Historically, the technology to implement such programs was limited, but advancements in equity admin platforms have made it easier to design and offer these choices. 

Terry noted that by giving employees the option to choose according to their current preferences, companies can enhance the perceived value of their comp packages. 

This flexibility presents a welcome change to the emerging AI and ML talent, helping motivate and engage them better. 

Additionally, the implementation of equity choice programs practically introduces an educational component — informing employees about the benefits and risks associated with their comp options. 

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Strategic equity grants: Balancing innovation and share pool limitations

For companies with significant limitations on their share pools, finding the right balance in equity grants can be crucial. 

Terry and Charlie discussed how larger organizations must navigate the trade-offs between offering competitive equity packages and managing shareholder expectations. 

Public companies, held accountable by their shareholders, can find themselves restricted by burn rate limitations. 

Terry shared that one of the emerging trends among these companies is the focus on broad-based employee stock purchase plans. This way, organizations can distribute equity more widely without heavily impacting the share pool reserved for high performers. 

He explained that these plans, particularly the ones with innovative features like cashless participation, can be an effective tool for ensuring broad-based equity distribution while preserving shares for top talent. 

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Addressing retention through innovative equity strategies

Another recurring topic was the importance of retaining top talent when designing equity compensation packages. 

Terry and Charlie talked about the risk of using stock options as a retention tool — and potentially having these options go underwater. To mitigate the risk, companies need to consider additional grants or introduce quarterly equity grants. 

Terry also highlighted the importance of structuring equity packages in a way that aligns with the organization’s broader financial and strategic goals. By doing so, companies can ensure their plans remain competitive. 

The goal is to create equity packages that are both attractive to employees and sustainable for the company in the long run.

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The future of equity comp in AI: Be as dynamic as the field itself

As the discussion wrapped up, Terry and Charlie reflected on the future of equity compensation in the AI and machine learning fields. 

They emphasized that the evolving nature of AI tech requires companies to be equally dynamic in their approach to compensation. 

Successful companies will balance the need to attract top talent with the imperative to manage dilution and burn rates. 

To do so, companies should embrace innovative equity strategies. Yet, to create those strategies, their comp teams need access to current and reliable market intelligence. 

This is how these companies can not only attract and retain top AI and ML engineers but also position themselves as leaders in the field. 

To do so, companies need relevant, real-time market insights. 

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Watch the full webinar recording to revisit all the topics Terry and Charlie explored. 

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