Sushi community,
I believe there are two immediate compensation issues:
- Creating an effective compensation governance process
- Compensating current contributors
C3 would love to be engaged by the community to help Sushi navigate these issues. If the proposal passes, which seems likely based on current results, we would be willing to work with Committee members to address the concerns over time. If the proposal does not pass, we are happy to spearhead a new workplan.
Compensation Committee
The current proposal combines multiple items with limited transparency. We would recommend forming the Committee first, and then tackling the other items later. If engaged, we would push for an accountable compensation governance process, as outlined below:
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Committee Formation Proposal: work with the community and contributors to establish an election process and initial Committee structure. This proposal should answer questions such as: How many members serve on the Committee? Will contributors have a vote? How long is service for? What is the process for submitting and evaluating applications? In our opinion, community elected members (excluding contributors and investors) should make up the majority of the Committee. Once this basic structure/process is approved, Sushi can move forward with the actual elections.
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Community Election of Compensation Committee Members
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Committee Scope Proposal: Once the Committee is elected, members can draft a Charter, which outlines the responsibilities of the Committee, what items fall under their purview, what items are subject to direct community vote, what mechanisms are required to promote transparency (like quarterly reports), how are Committee members held accountable, etc. At this time, we would also recommend the Committee request a quarterly budget that they can use at their discretion. This is important because it allows the Committee to cover any holes in their expertise (e.g., comp, recruiting). Reporting on the use of such funds is recommended to promote accountability. Finally, the Committee should draft appropriate compensation for community Committee members (contributors serving on the committee should not receive extra compensation). The Charter, budget, and Committee member compensation should be approved by the community.
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Ongoing Work: Now, the Committee can address compensation issues appropriately via an independent and fair process. This is where we would recommend an evaluation of compensation packages for current contributors. Generally, it is best practice to review pay levels and incentive plan design every year, especially for protocol leaders. With a Committee in place, the community indirectly has a voice in crafting such packages, as opposed to the current proposal where the community could not opine.
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Repeat: Conduct another election, approve budgets, tweak charter, outline plan, etc.
Compensation of Contributors
Of course, forming such a Committee will take time and Sushi may need to reward contributors sooner rather than later. We believe in this team, and we believe that the compensation packages were developed without malicious intent. However, the community deserves transparency, at least until an appropriate Committee structure is approved. Therefore, we would recommend that the details of the individual pay packages be disclosed for community review or, if privacy is of concern, C3 can be engaged on behalf of the community to evaluate the proposed pay levels and incentive plan design. Then, we can report back to the community about our findings and any risk areas. The community can then make a decision as to whether or not to move forward with the package or conduct an entirely new review process after forming a Committee.
Why C3?
To introduce myself, I am Cryptowsky, the founder of the C3. I have spent the last 6+ years advising the Board of Directors of major public companies and technology start-ups on executive compensation levels, incentive plan design, disclosure, and any other compensation issues. I am familiar with corporate governance and the development of a fair, accountable, and independent compensation review process. As I noted earlier, it is near universal for Compensation Committees at public companies to seek assistance from outside consultants.
In December 2021, I launched C3 to tackle the compensation issues faced by web3 companies, like determining pay levels, designing token incentives, and establishing compensation governance best practices. By no means would I call myself a “DAO Compensation Expert”. Nobody can hold that title quite yet. I can, however, leverage the insights and my experience working with corporations and startups to add value to web3 companies.
It looks like this proposal will pass, but we would love to work with appropriate parties, on behalf of the community, to make improvements. If there is interest, we can submit a separate, more detailed proposal with fees and proposed scope (or simply respond to this post). Happy to answer any questions.
C3
