IME, it's based off of "performance", not performance. So what happens is someone 4 levels above you on the org chart has a google sheet of all their underlings, their most recent grade - erm I mean performance review result - and their total comp.
They sort by total comp, then go down the list and figure out a reason to let that person go. Was there literally anything in your performance review summary they can ding you for? Yes? Phew, that was easy. No? Well, keep looking. "Strategic mismatch for skillset" "too junior, want senior" "too senior, want junior" "role eliminated due to headcount allocated to team being reduced" etc.
So, in the layoff I was privy to, somehow everyone who still had the large lucrative 4-year stock-denominated grants was suddenly gone, and the people who had the newer cash-denominated grants were still there. Meanwhile, several cheaper employees who were perennially underperforming were retained.
Honestly it really soured me on equity grants. It's a game of "heads I win (my company didn't grow and i got to pay you peanuts), tails you lose (my company grew and now i can just fire you and re-hire someone with a cheaper grant so you can't vest those now-very-lucrative appreciated shares)".
They sort by total comp, then go down the list and figure out a reason to let that person go. Was there literally anything in your performance review summary they can ding you for? Yes? Phew, that was easy. No? Well, keep looking. "Strategic mismatch for skillset" "too junior, want senior" "too senior, want junior" "role eliminated due to headcount allocated to team being reduced" etc.
So, in the layoff I was privy to, somehow everyone who still had the large lucrative 4-year stock-denominated grants was suddenly gone, and the people who had the newer cash-denominated grants were still there. Meanwhile, several cheaper employees who were perennially underperforming were retained.
Honestly it really soured me on equity grants. It's a game of "heads I win (my company didn't grow and i got to pay you peanuts), tails you lose (my company grew and now i can just fire you and re-hire someone with a cheaper grant so you can't vest those now-very-lucrative appreciated shares)".