Understanding Equity Offers In Job Negotiations

Friend: "I got an amazing offer! 50,000 shares!" Me: "What's the total outstanding shares?" Friend: "Um... I don't know" Me: "What type of shares are they?" Friend: "Not sure..." Me: "When can you sell them?" Friend: "I should probably ask..." I've had this conversation at least seven times in the last year, and here's the playbook I usually share with those friends. 1/ Understand the type of equity Not all equity is created equal: ↳ RSUs are actual shares that vest over time ↳ Stock options let you buy shares at a set price ↳ Preferred vs common stock have different rights 2/ Know your vesting schedule The classic is "4-year vest with a 1-year cliff" Translation: You get nothing if you leave before year 1 Then you get 25% after year 1 And ~2% each month after But don't assume this is standard. Always ask: ↳ What's my vesting schedule? ↳ Are there acceleration clauses? ↳ What happens in an acquisition? 3/ Get the full picture before discussing numbers Ask for: ↳ Total shares outstanding ↳ Latest 409A valuation ↳ Investor preferences ↳ Prior funding rounds ↳ Expected exit timeline 4/ Model different scenarios Don't just focus on the "we IPO at $10B" dream. Model out: ↳ Down round ↳ Flat round ↳ Modest growth ↳ Hyper growth ↳ Acquisition 5/ Understand the downsides If you're getting options, know that you might have to: ↳ Pay to exercise them (could be $$$$) ↳ Hold them for years before selling ↳ Pay taxes before seeing any gains ↳ Lose them all if you leave too soon 6/ Negotiate the details, not just the number Key terms to discuss: ↳ Early exercise options ↳ Extended exercise windows ↳ Acceleration triggers ↳ Refresher grants ↳ Tax implications 7/ Plan for the "what ifs" ↳ What if the company gets acquired? ↳ What if I need to leave early? ↳ What if the next round is a down round? Pro tip: Email these questions to the recruiter. Create a paper trail. Get the answers in writing. Remember: Equity can be life-changing. But it can also be worth zero. Your job isn't to be optimistic or pessimistic. It's to be realistic. What other equity negotiation tips would you add?

Friend: "I got an amazing offer! CPO with 1% equity at the next unicorn!" Me: "Did you check the equity acceleration clauses?" Friend: "The what?" Me: "What happens to your equity if there's an acquisition?" Friend: "Um... I didn't ask about that" Me: "Do you have protection if they replace your role?" Friend: "I should probably review the offer letter again..." I've had this conversation with many execs last year, and here's the playbook I usually share. 1/ Your offer letter is more important than your base Not all equity is created equal: ↳ Standard 4-year vesting can be lost entirely in acquisition or a layoff ↳ No protection clauses can cost you $1m+ in a restructure ↳ Acceleration triggers make the difference between life-changing wealth and starting over (Share credit with Marc Baselga - follow him for product careers!) 2/ The hidden contract terms that matter The classic is "industry standard terms" Translation: "We hope you don't read the fine print" Senior leaders should never accept standard equity terms And most companies will adjust for candidates they want Always check the offer letter for: ↳ "What acceleration triggers are included?" ↳ "What happens if the company is acquired?" ↳ "What protections exist if my role changes?" ↳ "What protections exist if this doesn't work out in year 1?" You might have left a huge 7-figure public tech job to take a big bet. Don't be left with nothing. 3/ The protection terms worth fighting for Ask for: ↳ Single trigger acceleration (acquisition automatically vests equity) ↳ Double trigger protection (acquisition + role change vests equity) ↳ Extended exercise windows (years, not months) ↳ Severance tied to vesting schedule ↳ Change of control provisions 4/ Model the worst-case scenarios Don't just focus on the "we IPO at $10B" dream. Model out: ↳ Acquisition before cliff ↳ Restructuring after 1-2 years ↳ Management change ↳ Role elimination ↳ Board replacing the CEO 5/ Protect your downside before worrying about upside If you're negotiating as a senior leader, know that: ↳ Severance matters more than most realize ↳ 6-18 months is standard for VP+ roles ↳ Healthcare continuation should be included ↳ Equity acceleration is negotiable ↳ Reputation protection clauses can be added Pro tip: Have an employment attorney review your offer letter. The $1,000-2,000 cost is trivial compared to what you might lose. Especially if you're joining a pre-IPO company or potential acquisition target. The offer letter is a negotiable contract. It is also NEW INFORMATION. New information means you can reopen the discussion. But most candidates only negotiate the numbers, not the terms. Your job isn't just to maximize the headline figures. It's to protect yourself from the most likely negative outcomes. What equity protection clauses do you think matter most? Want the Executive Compensation Cheatsheet? https://lnkd.in/gdjEgGku

⚠️ The Hidden Trap in Your Startup Equity I've had three conversations this week with executives planning to leave their startup. All face the same painful reality: they'll likely forfeit their vested equity. Here's why this matters for everyone in tech: Let's break down the math using an example: 💰 Your market rate: $1M annually 💼 Startup offer: $250K cash + $750K+ in stock options ⏳ After 2-3 years: You're ready to move on 🚫 The trap: You only have 90 days to exercise your options after leaving Here's what makes this brutal: 1. You must pay to keep your vested options 2. The company isn't public, so no guaranteed value 3. Miss the 90-day window? Everything disappears This creates three toxic behaviors: 🔄 People stay too long, artificially extending their tenure to avoid starting the clock 🏃♂️ Others leave too early once they realize the equity is worthless 🤐 Many just keep working, hoping things improve, while earning far below market The most painful part? This decision point usually comes when you're least equipped to handle it - when you're already planning to leave and have lost all leverage. 🎯 What you should do instead: - Check your exercise window NOW (industry standard is 90 days) - Figure out your option exercise cost today (shares × strike price + taxes) - don't wait until you're ready to quit - Consider negotiating a longer window when you JOIN, not when you leave - Factor this into your initial offer - sometimes less equity with a longer exercise window is worth more Why don't more companies offer longer windows? Tax implications, accounting complexities, and established precedents often deter them. But as an employee, you need to understand this before your equity becomes a golden handcuff with a ticking timer. Watch my latest Skip episode on compensation for more insights like this: https://lnkd.in/gwjqHwEa

Startup compensation is confusing AF. I've talked to a lot of early employees who don’t actually understand what they’ve been given. Most founders, and recruiters, say they’re giving you “equity”… but they’re usually offering stock options. So many folks think they own part of the company, when really they have the option to buy shares later. Here’s a plain-English breakdown (no MBA required): ✨ Equity (Common Stock) → Who gets it: Founders or very early hires (think pre-funding). → Perks: You own your shares once they vest. No purchase required. ✨ Stock Options → Who gets it: Most startup employees post-Seed. → Perks: No upfront cost. You can choose if and when to buy your shares at a set price (your strike price). → Watch out: You have to pay to exercise. And if you leave? You often have 90 days or you lose them. Nearly 70% of options go unexercised. ✨ RSUs (Restricted Stock Units) → Who gets it: Late-stage or public company employees. → Perks: They vest, and they’re yours. → Watch out: You’re taxed when they vest, even if you can’t sell yet. Working at an early-stage startup can be incredibly meaningful. The learning curve is steep, the impact is real, and if the company wins...you might too. But equity is a bet. And it only pays off if a lot of things go right. So ask the hard questions. Understand what you're being offered. And know what needs to be true for that upside to actually mean something. Hope this helps 💜🫶

Equity. It is one of the big reasons to join an early stage tech company. It can be life changing. It has been for me. But I find a lot of people don't really understand how to calculate it and the potential value. Here's an example if you had two offers: Company A offers you 1,000 shares (aka options). Company B offers you 5,000 shares. Is Company B's offer 5x better? You need some other info to calculate that. Starting with how many shares outstanding does the company have. Turns out that Company A has 100,000 shares outstanding and Company B has 10 million. Your equity in Company A would be 1% but in Company B it would be .05%. So you get 5x more shares with Company B, but 20x LESS equity (ownership in the company). I don't really care about the number of shares- I care about how much of the company can I potentially own. The key is to know how many shares are outstanding and understand what percentage your option grant would represent. A hiring manager should easily be able to get that info from Finance or HR. And if they aren't willing to provide that info, I'd look at that as a pretty big red flag. The next part of the equation is about how much is the company worth- latest funding round, fair market value, strike price, etc. Happy to do a post on that if people find it helpful.