• General

  • RFC Compensation Plan with Bonus Structure

Summary:
Seek Authority from the community to establish compensation and bonus framework.

Motivation:
The DAO has been operating under the framework introduced in stopgap budget proposal OIP-47A, since that time the DAO has added a governance council, and worked to reduce monthly spend. The stopgap budget proposal was never intended to be permanent, but allowed the DAO the bandwidth to flex and contract within the market demands of the time. Now we propose to adjust the framework, and add a longer term horizon and stability for contributors, so that the DAO can retain and reward contributors who help to push Olympus to its goals.

Background:
Historically there have been two schools of thought, both from within the DAO as well as from the community server:

  • Contributors are over allocated

  • Contributors are under allocated

No matter the plan that is presented, it is impossible for both groups to be fully satisfied. Therefore this proposal is based on months of effort with the aim of satisfying what makes the most logical sense, and keeping in mind what is best for the protocol’s overall health.

Goals:
The aim of the plan is to induce stability and security for contributors, as well as for the protocol. Contributors want to forecast allocations, and budget accordingly. Likewise, the DAO benefits from being able to project out costs and expenses so that it can adjust when necessary.

It’s important to note contributors are not employees, nor will they be, but will be acting as contracted members.
Under the proposed setup there will be two groups of contributors:

  • Consistent

  • Variable

Consistent Contributors:
Consistent contributors can be either full time or part time contributors. The key is that they are reliably present, have a set scope and expectations, and meet those standards when checking in with their lead.

Contributors must have two months of contribution at a certain level prior to being able to be offered a six month time frame. If a contributor fails to meet the expectation levels for two consecutive months, or if they stop contributing, they will be offboarded from this contract.

The benefits of contributing at a set level are predictability and stability in allocations from month to month.

Variable Contributors:
Variable Contributors, as the name suggests, are variable. They are not able to contribute to the same level from month to month either because there is a fluctuating need from the protocol, or they have variability in their own availability.

Variable contributors will speak with their leads prior to or at the beginning of the month to set expectations for workflow and compensation. The output will then be evaluated at the end of the month to see if objectives were met.

Budget:
Each department will have a budget within the total DAO $370k monthly allotment. There will be an allowance for a 25% max global budget flex increase in a month vs expected budget, to be used sparingly. This makes $462.5k the max monthly contributor allocation payout.

The disbursement of the flex increase will be limited by a max cap of 50% increase over a single department’s budget vs their expected budget, and must be agreed upon by all departments.

Allocations:
Allocation levels will follow a similar format from OIP-47. An amended table is included below to reflect the changes in departments. These levels will also factor into contributor bonus amounts.

Each month a contributor will be assigned a level. This level will equate their monthly allocation.

Bonuses:
Bonuses are based on hitting DAO goals, on a sliding scale, to ensure that incentives are aligned between contributors and the community.

The goals and weight are as follows:

Council and Stratego allocations have been lowered and bonus increased to align incentives with the protocol and community. Contributor allocations remain the same, the only changes are the addition of bonus.

General and Engineering yearly Bonus Max:  $84,000
Content yearly Bonus Max: $24,000

Total Bonus is calculated by level of contribution and achievement of OKR’s on a sliding scale and will be distributed in 6 months at the beginning of January 2023. Around that time we will assess if it makes sense to continue on a 6 month time frame or pivot to a 12 month frame.

Please keep this 6 month time frame in mind when reviewing the charts below that calculate yearly totals.

Runway:
When creating this compensation plan a few factors were taken into account. One of which is Runway.
We will make a few assumptions:
1. Roughly $28M in the DAO treasury
2. Assuming 0 revenue or growth to this amount
3. Assuming 40 Contributors and 7 paid Council/Stratego positions

Costs can be broken down into these basic categories:
-Contributor compensation: $370k/month - $462.5k/month when flexed
-Monthly Expenses / Services: $500k/ year estimate
-Audits: $500k/year budget
-Legal: $500k/ year budget

With the previous assumptions in mind, this results of this proposal are estimated to output:

  • 4.7 years of runway if all goals are 0% met and budget is not flexed

  • 2.1 years of runway if all goals are 100% met and budget is flexed upwards

Edit to Add: All compensation and bonus will be paid out in gOHM. Currently compensation is paid out in gOHM, as it has been for over 6 months, previous to that compensation was in OHM.

Amend compensation structure and add bonus framework?

This poll has ended.

    Thank you hOHMwardbound

    Very well-written and well structured. I really like your excellent work. Clearly a lot of thoughts have gone in to framework. Also, big kudos for stream-lining the DAO organization thus far.

    Now (and since this is me and I am autistic and unable to phrase myself in humanly palatable sentences), here goes the comments yous wont enjoy:

    6 month job security (If I understand this “allocation concept” correct)
    I think all can understand that contributors “want” stability and security. But today we live in the age of remote work and location independent assignments. This means we do not need to tear up any roots, or grow roots in a new place to take on work. Because of this, security and stability is less warranted since the contributors “investment” in a new job is less. Also 6 months job security is unheard of except for Wall Street CxO’s who sits with big parachute agreements. If this is what it takes to get your kin to work I suggest we look for alternative resources elsewhere on the globe who are eager, hungry and very capable these days.

    Runway
    Again, thank you for publishing this key info. But 2.1 – 4.7 year runway is a very uncomfortable runway. $28M needs to last longer than that. Crypto-winter 2018/2019 lasted up to 2 years depending on how you measure. And that was without macro headwinds. This time, we are in new bear and macro looks like total shit. $28M is a shitload of money. Come on, man. 2.1 years?? Must do better.

    Bonus goals
    Thank you, most of them are S.M.A.R.T objectives. But lets dig in to them:

    A. Treasury growth
    Reaching 400M end of year is just a mere return to where we were on May 1st. Come on, man. Who sets a market value based bonus goal just after a crash – taking as reference a crash value? Thats the scandalous stuff they lecture about in business schools, and what goes into the newspapers and gets trad bosses axed. Changing to RFV makes it a bit better, still possible to manipulate though.

    B. Premium
    We lack credible data on backing to assess this. Also 30d MA of price, or 30d MA on backing – be specific.

    C. Decentralized Operations
    This is the only non-measurable objective. As such, I don’t like it. I also don’t care much at this point in time. This is an internal pat-your-back kinda thing with unclear implications. We don’t have a product yet. That should be the focus. Get a working product on the market.

    D. Ranking
    This is good.

    AND/OR conditionality:
    Essential for bonus payout is that there is AND conditionality between the goals. Payout can only occur if all objectives are met at the same time. If you play with OR here it is a corrupt or silly composition of goals because very little hinges on the performance of the team and almost every objective is just dependent on external market development. If cryptomarket rallies, A is certain to be achieved. B is likely to be achieved. If cryptomarket continues to drop, D is certain to be achieved because of our stables. The only isolated team dependent objective is C – which is not measurable. Bonus should be awarded for things we have accomplished – not what the external market accomplishes for us. The goals are only a challenge if they need to be met in unison. Otherwise its basically free payout.

    Bonus amounts
    Max bonus = $540.000 ? Paid and measured in USD? No man, come on. Be serious. If you believe in Olympus you own a decent and big stack of OHM. Thats how you get your bonus. Ideally vesting like most other projects to align long-term. Contractually paid half a million in USD? Seriously. Come on. Dont work for Olympus if you don’t want to align your gainz together with the community. No fat cat elite lane of getting fat USD bonus checks please. I sickening myself as I write. Half a million. In income. Look in the mirror! We the community are the ones who have paid up to create your funds, enable your salaries and the Treasury. Many lost almost everything. Is everyone getting paid by the DAO, or how do you get your OIP’s through.. I don’t get it and I don’t even vote anymore, cuz big wallets just crush votes if needed anyway. On chain governance – how is that gonna help to thwart corruption.

    Compensation payouts
    The payouts from the DAO are extremely difficult to track on-chain. It is as if the DAO is intentionally trying to obfuscate them. Please change to on-chain transparency in payouts. We should be able to follow on-chain the money and see how these funds are managed and possibly impacting user and market behavior including impact on OHM price. Be transparent. Be responsible. Have integrity.

    I like the structure you have presented here, but work needs to be done on the content. I will thus vote no on this RFC on basis of content. Structure is excellent.

    Thank you for reading.

        bubbidubb Max bonus = $540.000

        Quick point of clarification. That 540k figure is the maximum paid to a council member, of which 420k is the maximum bonus.

            hOHMwardbound A few questions:

            1. Can you clarify if the bonus will be paid in USD(C) or gOHM? I assume gOHM.
            2. Is there any vesting to align contributors in the long-term?
            3. Regarding runway, it is perhaps a tangential discussion, but knowing by how much the council aims to grow the DAO treasury in order to extend the runway would be helpful. (To counter the obvious reaction that the DAO treasury will -> 0 in 2.1 years.)
            4. This isn't material to the poll, but having a monthly update from the council on progress and actions towards the achievement of OKRs would be fantastic. (I can help with this, too!)

                1: Bonuses proposed don't match 2022 DAO-Wide OKRS set in https://forum.olympusdao.finance/d/1133-request-for-comment-implement-leadership-council.

                #2022 DAO-Wide OKRS

                [DAO-WIDE 1] Grow Treasury: drive OHM’s use as trusted backing by growing Olympus treasury by 1.5x ($632 million Olympus Treasury vs. $421 million currently)

Stretch Goal: 2x Treasury to $842 million

BONUS PROPOSED: Increase Treasury to $400 million (MISMATCH) 

[DAO-WIDE 2] Increase Premium: increase premium to 50% higher than backing (0% premium currently)

Stretch Goal: Increase Premium to 100% higher than backing

BONUS PROPOSED: Increase premium to 20% higher than backing (MISMATCH) 

[DAO-WIDE 3] Drive Adoption: drive OHM’s use as unit of account by increasing number of wallets holding OHM (200K wallets vs. 120K currently)

Stretch Goal: Increase wallets holding OHM to 300K wallets

BONUS PROPOSED: NONE

[DAO-WIDE 4] Decentralize Operations: shift to transparent, autonomous operation with on-chain selection of leadership, voting for management of DAO funds and treasury. Removal of Treasury multi-sig.

BONUS PROPOSED: ADDED but with changes, a new Risk Management committee

[NEW-RANKING]

BONUS PROPOSED: Newly added in Bonus proposed.

                  2: Budget includus a NEW allocation for 'Council' of $50 000 per month.

                  "Addenda, Council to propose long-term incentives that align with DAO goals. Allocations will include vesting terms based on KPIs to align Council and DAO incentives, with details to be proposed in a separate OIP" as per https://forum.olympusdao.finance/d/1133-request-for-comment-implement-leadership-council

                  - Q: This does not align with any monthly contributer payments to Council, it should be based on KPI's with vesting.

                  - Note: Does not include any comp details for Council, https://forum.olympusdao.finance/d/1156-oip-91-olympus-governance-council.

                  - Note: 'Monthly Allocation by level & role' doesn't show Council allocation information.

                    3: As per https://forum.olympusdao.finance/d/1156-oip-91-olympus-governance-council, "Every 3 months the OGC must prepare a quarterly report detailing the achievements, operations, revenues, and expenditures of the DAO for the previous quarter - along with a detailed description of the strategic direction for the DAO and how the Council plans to achieve that vision."

                    - Q: Where is the public accessible quarterly information that roles-up into achieving OKR's?

                      gordob Thanks for asking!! As you'll see the Council OIP passed in April, and we are just now nearing the end of q2. We do have a completed Q1 quarterly report, going above the OIP mandate, but since it was delayed as we figured out the setup and cadence (the first time always takes longer), we are opting to combine and push it with the Q2 report and publish them in July once we have the full information from Q2 collected.

                        gordob I'm confused at what the question is here? The OIP for council did not specify any specific budget, paying council members as contributors is more costly on a monthly basis than the proposed DECREASE in monthly allocation for council members who were previously allocated as a part of the team they've been contributing to. The monthly allocation by level and role does not show Council or Stratego allocations, as you'll see below they are a flat $10k.

                            gordob Correct. The OKR's you've listed were not included in the OIP or snapshot, and changes were made shortly after they were created per suggestions based on market activity, implementation of inverse bonds, and plan to implement range bound stability. The above OKR's are here in this RFC, and are subject to change based on comments and suggestions as a result of this RFC until they are formalized and tied to the bonus structure via OIP and snapshot vote.

                                Jem

                                1. Plan is to comp in gOHM
                                2. This is a 6 month bonus, we've debated having it be a vesting bonus where it wold stagger vest similarly to Index Coop's Dynamic Staking Model. This is still up for debate- the question at hand is do we anticipate contributors dropping off in January after the bonus is allocated, and can we incentivize retention in a non-monetary way. The DAO is more productive when people are excited to wake up and contribute vs people showing up to wait out a vesting bonus.
                                3. Good point, the use of current funds with no additional growth is painting the worst case scenario. There are a lot of factors at play in the broader market that will impact treasury growth, but the goal is to continue to grow the treasury. I'll see if I can get more concrete numbers for you but I think this will be easier to project out over time once range bound stability is implemented.
                                4. Ty!! Appreciate this feedback and offer for help! We posted the initial update earlier this month and will have the q1/q2 quarterly update come out in July but can definitely see about implementing a more informal blurb.

                                  hOHMwardbound - The query is,

                                  1: Up until now there has been no agreement on comp for 'Council' and the Addenda notes that allocations to Council will include vesting based on KPI's -- So this is a 180 degree turn on this now, as you want to implement monthly comp for council without vesting nor linked to KPI and bonus.

                                  2:

                                  2a: Double-dipping of 4/7 council members in full time roles. New monthly comp for 'Council' on-top of full monthly roles and 'Council' will be legible for Bonus paid to 'Level & Role' and 'Council' function. There shouldn't be both.

                                  Current earnings - 01-05-2022 Period

                                  - Apollo (3,3) - Not Shown

                                  - hOHMward bound - $17 425 (Operations)

                                  - indigo - $25 000 (Engineering)

                                  - JaLa - $17 425 (Partnerships)

                                  - sh4dow - $17 425 (Policy)

                                  - Wartull - Not Shown

                                  - Zeus - Not Shown

                                  2b: - Q: Has the Council being paying itself prior to this?

                                  Note: There is no current allocation for council members on the public available allocation doc, Data: https://datastudio.google.com/reporting/cb74b814-7ce1-4449-88e5-eac57637b934/page/ZK0YC

                                      Thank you for putting the time and effort in with the team @hOHMwardbound to produce such a comprehensive comp plan. I know many of us have been asking for months to see something official, so as a contributor this is much appreciated!

                                      Looking forward to seeing things ratified and I think as a result it will be much easier for us to attract top talent in the industry!

                                        hOHMwardbound - So on the premise of OKR's to start a 'Council', they have changed now with much lower targets, no current public tracking and high payouts to 'Council' especially around;

                                        [DAO-WIDE 1] Grow Treasury: drive OHM’s use as trusted backing by growing Olympus treasury by 1.5x ($632 million Olympus Treasury vs. $421 million currently)

                                        BONUS PROPOSED: Increase Treasury to $400 million (MISMATCH)

                                        and

                                        [DAO-WIDE 2] Increase Premium: increase premium to 50% higher than backing (0% premium currently)

                                        BONUS PROPOSED: Increase premium to 20% higher than backing (MISMATCH)

                                            Definitely good clarification point that everything will be paid out in gOHM

                                            bubbidubb Thanks for your comments!! I'll try to reply as organized as possible!

                                            6 month Job Security:
                                            -I hear what you're saying about remote work and not uprooting, but on the flip side this is not tradfi, its defi, the wild west of crypto. There are no health benefits, no PTO, no retirement matches that you'd get in a more traditional place of contribution. We allocate in our native token.
                                            And in this plan there is still a need for contributors to stick to the same output level of contribution, its not a given that they'd receive the same allocations for 6 months regardless. We have a great team and after the process of reducing the number of contributors I think it's important that we now offer some security. I've seen quite a few other projects offering 12m contracts so the truth of the matter is that we will have contributors move on if this doesn't change.
                                            Nobody wants to contribute all month and not know what their allocations will be, it's not sustainable. And the DAO needs to be able to forecast out it's spend. If we have contributor losses we will have to contract out the work which will be more costly and take more time for products to ship. I think it's underestimated the number of hours contributors spend, often at uncomfortable times of the day, to make syncs times and complete tasks. DeFi is global and therefore 24/7 something is happening in the DAO.

                                            Runway:
                                            The 2.1 figure would be based on hitting all of our goals, which would indicate strong protocol health and a growing treasury, thus increasing the runway. For the sake of the modeling I didn't include any treasury growth in calculating those figures. What costs would you suggest cutting and what is a more appropriate runway in your mind? Should there be pause/check in period in 6-12 months to assess?

                                            Bonus Goals:
                                            A. With all due respect, treasury growth is largely impacted by changes in value of our treasury holdings as well as broader market conditions. We anticipate further challenges on this front and additionally are utilizing inverse bonds which have an impact our treasury size. To increase treasury despite these factors is no small feat. Again, what metric would you propose here?
                                            B-D+ let me see if I can tap in shadow or Jala here.

                                            Bonus Amounts:
                                            -Will be paid out in gOHM but measured in USD, as allocations have been. We debated a plan that had all bonus amounts calculated in gOHM but that lends itself to paying out much higher allocations and bonuses than anticipated, if there were to be a rally, and creates the inability to calculate runway.
                                            Nowhere on here does it say anything about paying in USD, I will be sure to specify that it's in gOHM but figured it was understood as it's the precedent that's been set. Once again, I want to point out that if all bonuses are hit, as needed to get that payout, all community members will also be benefiting from the protocol's performance. DAO members are community members too, please be respectful.

                                            Compensation Payouts:
                                            All compensation payouts are shared in the data studio that is updated monthly. This is straightforward to read and we have a further explanation of expenses that will be published in the quarterly report. I'd like to say that there is a lot of integrity shown by publishing these figures and updating them monthly. This is the definition of transparency.

                                              gordob

                                              Correct, previously there has been no agreement on comp for council. Council members who were also contributing to their various departments were compensated from the departments. I don't see the 180* here. Comp will now be reduced and bonus is tied to OKRs/kpi however you want to name it. Discussion on the RFC and in DAO-syncs highlighted the disincentive for members of the DAO to be on council if they couldn't afford monthly bills.

                                              2. There is no double dipping, the comp is only council comp and council members are STILL contributing to their departments, but not being comped from departments for this work. It is more work, for less monthly comp, with potentially more upside. It is not both. That's why it's only listed in the separate table below and not on the level chart.

                                              There have been no separate council allocations. Just as contributors as you've listed above.

                                                  dr00 Thanks for taking the time to read through!! I appreciate your patience as we went through the many iterations and I'm looking forward to the next steps as a DAO 🤝