Question 1

How do I evaluate equity compensation in a job offer?

Accepted Answer

Evaluate equity by considering the grant value, vesting schedule (typically 4 years), company stage and growth prospects, and potential dilution. Compare the present value of equity to cash salary difference, and consider your risk tolerance and financial needs.

Question 2

What is a typical vesting schedule?

Accepted Answer

Most tech companies use a 4-year vesting schedule with a 1-year cliff. This means you receive nothing in the first year, then 25 percent of your equity after year 1, with the remaining vesting monthly or quarterly over the next 3 years.

Question 3

Should I take lower salary for more equity?

Accepted Answer

It depends on the company stage, your financial situation, and risk tolerance. Early-stage startups offer higher equity but more risk. If you have savings and believe in the company, equity can provide massive returns. If you need stable income, prioritize salary.

Question 4

How do I calculate equity growth rate?

Accepted Answer

Research the company's funding stage and industry benchmarks. Pre-IPO companies in growth phase might see 15-30 percent annual valuation growth. Post-IPO companies typically see 10-20 percent. Be conservative in estimates and consider downside scenarios.

Question 5

What are RSUs vs stock options?

Accepted Answer

RSUs (Restricted Stock Units) are actual shares granted to you that vest over time. Stock options give you the right to buy shares at a set price. RSUs have value even if stock price drops, while options can become worthless if stock price falls below strike price.

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