Authored by Milamber on 1 Jan-25 with review from the Treasury Council
Proposal: Executive Team Severance Policy Proposal - Google Docs
Summary
The Executive Team proposes to provide Defi Ted with a severance package of six months of regular salary as part of the agreement to step down from the Executive Team and forgo the remainder of payments related to the Executive Team incentive plan, and in recognition of his hard work as Lead.
The monetary amount for this will total $72,000 and will be paid in six equal installments at the start of each month along with normal payroll distributions. As part of the agreement, his contributor status will officially be terminated on 1 January and all remaining distributions relating to the Executive Team incentive scheme will be forfeited (as is the case for other Executive Team members exiting the DAO).
We propose that a general policy also be implemented for all other exiting and continuing Executive Team members of not more than one month of severance on termination of contributor status, should there be further restructurings taking place in the future which require one or more to also step down.
Motivation
The Executive Team has recently prepared a proposal focused on restructuring DAO operations (see PDIP 25 - Restructuring DAO Operations for details), and as part of this two members of the current Executive Team have agreed to step down, including the last remaining original founder - Defi Ted.
While the DAO does not have a formal severance policy for contributors, a number of DAO contributors are on short-term contracts of one year which include an option of a one month notice period and pay.
As said Executive Team members are forgoing notice periods in addition to remaining Executive Team bonuses and options approved via TIP 1A - Executive Team Incentive Scheme, and in recognition of the hard work and long hours expended in driving the DAO forwards over a number of years, the Executive Team feels it is appropriate to offer monetary compensation in the form of severance payments.
It is therefore appropriate to implement a general policy for all current and continuing Executive Team members to ensure fairness and use as a baseline for the agreement of any payments proposed for team members exiting as part of the current restructuring, or any hypothetical future event.
Specification
Agree a base level policy for Executive Team members
As no Executive Team member has previously left the DAO there has been no policy in place regarding severance, nor are they officially contracted with the DAO at present. In saying that, all Executive Team members have worked extremely hard over the course of their tenure in addition to taking on risk and given the sudden nature of restructuring processes and need for smooth transition it is reasonable that some sort of severance or notice be offered. In line with notice periods offered to team members who have been contracted the Executive Team feel a baseline of one month of salary is appropriate.
Identify whether a variation to the standard policy is appropriate for team members
As DAO lead and last remaining founder, Defi Ted has put an enormous amount of time, effort and sacrifice into getting the DAO to where it is today. He is responsible for every team member here being brought on, and a majority of overall strategy and direction over the past three years. In stepping down from the Executive Team he is forging the remainder of his Executive Team incentive plan, and the community and business he created. As such the team feels a more generous package appropriate.
Determine the appropriate amount to be offered subject to acceptance
The Executive Team has discussed the issue with key investors and has agreed that a correct approach would be to look towards typical exit packages for founders and CEOs in other businesses, which per research is in the region of 6-12 months salary (median of c.8). Bearing in mind the backdrop of a larger restructuring, DAO environment and lack of contract the lower end of that scale has been used.
Present proposal to Paragons and Treasury Councils for approval
This proposal will be presented to and discussed in detail with our councils to ensure that it has their approval. It will initially remain private due to its sensitive nature, and some form of private on-chain vote will be required to take place to signal official approval of these changes by the Treasury Council.
Execute payments over the agreed period
In order to not put additional burden on the DAO with respect to gathering stablecoin funds, as well as the loss of any earning potential of that capital, it has been agreed that it would be appropriate to make such payments in line with the normal payroll cycle, subject to approval of the severance package.
Rationale
A general policy is required in the event of any further changes
In order to streamline any future process and also acknowledge the efforts and risk taken on by the Executive Team in leading the DAO, some form of financial buffer in the event of an exit is appropriate.
The Executive Team agrees it is fair in the context of a founder voluntarily exiting
While under no legal obligation, for the reasons noted above and based on the way we have operated and importance of Defi Ted to the DAO’s existence we feel it is appropriate to offer this sort of package.
Timeline
The first payment will take place on 1 February 2025 and the final one will take place on 1 July 2025.
Costs
The severance payments proposed are $72,000 paid in six equal monthly installments and $10,000 paid in one monthly installment, both paid at the start of the month alongside normal payroll.