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What counts as dependable compensation?
Compare compensation over the same period, such as the first year or the first several years. Keep amounts you can rely on distinct from amounts that depend on performance, continued employment, or a future sale.
- Salary: compare the stated base pay for each offer.
- Bonus: identify whether it is guaranteed, discretionary, or tied to individual or company results, and when it is paid.
- Benefits and retirement contributions: compare the specific benefits and employer contributions rather than treating them as interchangeable with salary.
- Sign-on compensation: note any repayment condition or other restriction.
- Equity: list it separately from cash. Do not count an unvested award or a possible future salary increase as guaranteed pay.
This gives you a clear cash comparison without implying that every employer offers the same compensation components.
What details should you get about the startup grant?
A share or option count by itself does not tell you what percentage of the company the grant represents. Ask the employer for the underlying documents and the assumptions behind any percentage it quotes.
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- Award type: for example, incentive stock options (ISOs), nonstatutory stock options (NSOs), restricted stock, or restricted stock units (RSUs).
- Grant size and status: the number of shares or options, the grant documents, whether the board has approved the grant, and when it is expected to take effect.
- Ownership basis: the fully diluted share count used to calculate the quoted percentage, which securities are included, and whether the figure is before or after a planned financing or option-pool increase.
- Option price information: the strike price, the common-stock fair market value used to set it, and the date of that valuation.
- Vesting and departure terms: the schedule, cliff, any acceleration provisions, and what happens on termination or a sale.
- Exercise and liquidity: how long vested options remain exercisable after employment ends, the cash needed to exercise them, and whether employees can currently sell shares—and under what conditions.
The plan and award agreement control the actual terms. A verbal summary or percentage estimate cannot substitute for those documents.
How do you translate the grant into a useful comparison?
Calculate the stated ownership percentage
For a grant expressed as shares or options, the basic snapshot calculation is:
Grant shares ÷ stated fully diluted share count = stated ownership percentage
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Ask what the denominator includes. Future share issuance, fundraising, or an option-pool increase can dilute current holders, so the percentage is not a guaranteed future ownership share or payout.
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Model outcomes, not a headline value
Build a simple scenario model for a downside case, a middle case, and an upside case. For each, write down the assumed company outcome and relevant timing, then estimate:
- how many shares would have vested by that point;
- the assumed dilution and resulting ownership;
- the cost to exercise vested options at the strike price;
- any estimated tax cost under the applicable rules; and
- whether a sale or other employee liquidity event could actually provide proceeds.
Include a case in which no sale occurs within your decision horizon or employees receive no proceeds. Do not treat a preferred-share financing valuation or a 409A common-stock fair market value as cash available to you. Without company-specific capitalization, investor rights, and sale terms, a precise employee payout estimate is not established. No universal risk discount or reliable exit-probability formula is established either; label assumptions rather than presenting a modeled figure as certain compensation.
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How do vesting, exercise, and departure change the risk?
Vesting determines when you earn the award. A cliff may mean that leaving before the cliff results in no vested portion, but the grant documents determine the result. Options that have vested are still a right to buy shares: exercising them requires paying the strike price.
Check the post-termination exercise period before accepting. A short window can force a decision—and potentially a substantial cash outlay—before any liquidity is available. Carta’s educational material describes 90 days as historically common and says some companies offer longer windows; that is general market context, not a statement about this employer’s grant. Use the offer documents to confirm the actual period and any exceptions.
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Tax treatment depends on the award type, dates, exercise and sale details, income, and jurisdiction. The following is general information about U.S. federal tax rules, not individualized tax advice.
- ISOs: under regular income-tax rules, statutory options generally do not create income at grant or exercise. Exercising an ISO can, however, create an alternative minimum tax (AMT) adjustment based on the spread when relevant conditions apply. The IRS’s Publication 525 (2025) says: “Your AMT basis in stock acquired through an ISO is likely to differ from your regular tax basis.” This does not mean every ISO exercise causes AMT.
- NSOs: the IRS says a nonstatutory option without a readily determinable fair market value generally creates income on exercise equal to the stock’s fair market value minus the amount paid.
- Later sale: holding periods and sale details can affect the tax result. Exercise and sale are separate events, so a tax cost may arise before you can sell shares.
Consider getting advice from a qualified tax professional before exercising, particularly if the exercise requires substantial cash or could create tax before a sale.
How should you weigh the offers side by side?
| Comparison point | Cash-heavy offer | Startup-equity offer |
|---|---|---|
| Near-term pay | Salary and other guaranteed compensation | Salary and other guaranteed compensation, with equity kept separate |
| Equity details | Any stock award and its liquidity terms | Award type, share or option count, strike price, and fully diluted percentage basis |
| Time and retention terms | Bonus conditions or vesting, if applicable | Vesting, cliff, acceleration, and treatment on departure or sale |
| Costs and taxes | Applicable compensation taxes | Exercise cost, relevant tax treatment, and sale timing |
| Liquidity and downside | Reliability of cash compensation | Whether and when shares could be sold, including the possibility of no proceeds |
| Possible negotiation topics | Salary, bonus, and benefits | Salary or sign-on cash, grant details, vesting, and exercise period |
This is a set of comparison dimensions, not a scoring formula. Your cash needs, risk tolerance, jurisdiction, and the actual offer documents determine how to weigh them.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What equity statistics can—and cannot—tell you
Carta reported that the median seed-stage company’s employee option pool represented about 13.5% of fully diluted shares in 2026, compared with about 17.2% for its median Series D company. Those figures describe company option pools, not the percentage an individual employee should expect to receive.
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Carta also reported that 32.8% of vested, in-the-money startup options were exercised in Q2 2024 in its H1 2024 report. That historical aggregate is not the probability that a particular employee will exercise options, make a profit, or realize value. Neither statistic predicts the outcome of a specific offer.
What can you negotiate or clarify?
Start with the terms that matter most to your decision. You can ask whether the company can increase guaranteed salary or provide a sign-on payment, clarify the fully diluted denominator and grant approval status, or change the grant size, vesting terms, or exercise window. The employer’s flexibility is not established in advance; treat each as a discussion, not a promised option. University career guidance and Carta’s educational material also recommend checking share counts, vesting, and attached conditions.
If the company cannot increase equity, Carta suggests discussing higher salary or a sign-on bonus. Do not accept lower guaranteed pay on the assumption that speculative equity will make up the difference.
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