How to Evaluate Equity in a Job Offer

By Renata Solberg, Director of Interview Coaching · Updated June 26, 2026 · ~40 min read

An offer lands in your inbox and the equity line jumps out: "50,000 stock options" or "$120,000 in RSUs over four years." It looks like the part of the package with the most upside, the piece that turns a good job into a life-changing one. And it might be. But of all the numbers in an offer, equity is the one most people understand least and scrutinize least, which is exactly backwards. Salary is concrete and easy to compare. Equity is abstract, conditional, and wrapped in jargon, so candidates either over-value it ("I'll be rich") or wave it off entirely ("it's probably worthless") — and both reactions cost real money.

This guide exists to give you a third option: evaluate it. Not with a finance degree, but with a short list of questions and a clear mental model of what each term does. By the end, you'll be able to look at any equity grant — startup options, late-stage RSUs, or public-company stock — and form a grounded view of what it's worth, what could erode it, and whether to weight it heavily or lightly in your decision. We'll be honest throughout: equity is a bet, the downside is real, and nothing here is financial or tax advice. What you'll get is the literacy to ask the right questions and read the answers clearly. Let's start with why this is genuinely hard.

Why equity is the hardest part of an offer to judge

Equity is hard to evaluate for four reasons, and naming them defuses most of the anxiety around it. First, it's conditional: you don't own it on day one. It vests over years, and if you leave early you forfeit the unvested portion. Second, it's illiquid at most private companies: even fully vested, you usually can't sell your shares until a defined event — an acquisition or a public offering — that may be years away or may never come. Third, it's uncertain in value: a private company's share price is an estimate, not a market quote, and the eventual outcome ranges from a fortune to zero. Fourth, it's wrapped in jargon — strike price, 409A, cliff, dilution, AMT — that's designed for accountants, not candidates.

The result is an asymmetry of information that favors the employer. They know their cap table, their funding history, their runway, and the realistic range of outcomes. You typically see a single headline number and a percentage, if you're lucky. Closing that gap is the whole job of this guide. You don't need to match the company's sophistication; you need to ask a handful of pointed questions and know what good and bad answers look like. A company that's confident in its equity will answer them readily. One that dodges is telling you something too.

There's also a quieter reason equity is hard: it's emotional in a way salary isn't. A base number is just a number; an equity grant comes wrapped in a story about the company changing the world and you getting rich alongside it. That story is intoxicating, and it's meant to be, since equity is as much a retention and motivation tool as it is compensation. The narrative isn't dishonest, exactly, but it's optimistic by design, and optimism is contagious in an interview process where everyone is excited and the founder is magnetic. Part of evaluating equity well is noticing when you're being moved by a feeling rather than a fact, and gently separating the two. You can be genuinely enthusiastic about a mission and insist on the numbers. In fact, the people who end up happiest are usually the ones who did both — who loved the company and still asked exactly how many fully diluted shares were outstanding before they signed.

The two mistakes that bracket every bad equity decision

Almost every equity error a candidate makes lives at one of two extremes, and naming them up front helps you steer between them. The first is the over-believer: someone who hears "options" and mentally spends the money, accepts a thin salary to chase a dream, and never asks the questions that would have shown the grant was modest. The over-believer treats a recruiter's enthusiasm as data and a best-case scenario as a plan. The second is the dismisser: someone so allergic to jargon that they wave equity off entirely, leave real negotiable value on the table, and pick a worse overall package because they couldn't be bothered to learn four terms. The dismisser throws away a legitimate component of compensation out of discomfort rather than analysis.

The whole art of evaluating equity is refusing both reflexes. You take the grant seriously enough to do the math and ask the questions, and skeptically enough to discount the hype and plan around fair cash. That posture — engaged but sober — is what separates people who get talked into deals from people who choose them. Everything in this guide is built to make that posture easy: a fixed set of questions, a couple of formulas, and a clear sense of what good and bad answers look like. You don't need to predict the future; you need to refuse to be either dazzled or dismissive.

The main types of equity you'll be offered

Equity comes in a few standard shapes, and the type you're offered usually tracks the company's stage. Knowing which one you have changes everything about how you evaluate it, because each behaves differently on cost, timing, and tax.

Stock options (ISOs and NSOs)

A stock option is the right to buy a set number of shares at a fixed price — the strike price or exercise price — locked in on the day you're granted them. You don't own the shares yet; you have the option to purchase them later, typically after they vest. The bet is simple: if the company's share price climbs above your strike, you can buy low and the difference is your gain. If it stays below your strike, the option is "underwater" and worthless to exercise, though you've lost nothing but the opportunity. Options come in two tax flavors: incentive stock options (ISOs), which can receive favorable tax treatment but carry alternative-minimum-tax complications, and non-qualified stock options (NSOs), taxed as ordinary income on exercise. Early-stage startups overwhelmingly grant options.

Restricted stock units (RSUs)

An RSU is a promise of actual shares delivered to you once you vest — there's nothing to buy and no strike price. When the units vest, you receive shares (or their cash value) outright. Because there's no purchase, RSUs are never "underwater": as long as the stock has any value, vested RSUs are worth something. The trade-off is on the tax side — RSUs are generally taxed as ordinary income at vesting, on the full value, which can create a real cash bill, especially at a private company where you can't sell shares to cover it. Larger private companies and nearly all public companies grant RSUs rather than options.

Restricted stock awards (RSAs) and early-exercise grants

The earliest employees and founders sometimes receive restricted stock awards — actual shares granted up front, subject to vesting (the company can repurchase unvested shares if you leave). These can carry significant tax-planning advantages early on, but they're rare for typical hires and come with their own elections and deadlines. You may also see "early exercisable" options, which let you buy shares before they vest. These are advanced cases; if one lands in your offer, that's a strong signal to get professional tax advice.

Options vs. RSUs, side by side

Because the option-versus-RSU distinction underpins almost every other decision, it's worth seeing the trade-offs laid out directly. Neither is "better" in the abstract — each fits a different stage and risk profile.

The intuition: options are a leveraged bet. A low strike at an early company means huge potential multiples if it succeeds, and nothing if it doesn't, plus you have to pay to participate. RSUs are more conservative: less explosive upside, but they're worth something as long as the company is, and there's no purchase decision. As a company matures and its share price climbs, granting options with a high strike makes less sense, which is why the industry shifts to RSUs at later stages. Match your evaluation to the instrument in front of you.

A useful way to feel the difference is to imagine two outcomes for the same company. Suppose the share price triples. Your options, with a low strike, capture nearly the entire run-up, since the gap between a $2 strike and a $9 price is $7 of gain per share, a multiple far larger than the price's own threefold move, because your cost basis was so low. RSUs in that same scenario simply track the price: three times the value, no leverage. Now suppose the share price halves. Your options may slip underwater and become worthless to exercise, a total loss on that grant; your RSUs are merely worth half, diminished, but still real money. That asymmetry is the entire trade. Options pay you more for being right and punish you harder for being wrong; RSUs soften both ends. Neither is superior in the abstract. The right question is which risk profile fits your finances and your conviction about this company.

One more practical consequence: because RSUs are worth something as long as the company is, they rarely require an agonizing exercise decision; you simply receive shares and handle the tax. Options, by contrast, force you to decide whether and when to spend your own cash to participate, often while the company is still private and the shares can't be sold. That decision, and its cash and tax demands, is where a lot of otherwise-good option grants quietly fall apart. Keep it in view as you read the sections on the exercise window and taxes below; with options, the grant is only half the story — the act of turning it into ownership is the other half.

Vesting, cliffs & schedules

Vesting is the schedule by which you earn your equity over time. You're almost never given the whole grant at once; you earn it in pieces for staying and contributing. Understanding the schedule tells you how long you must remain to capture the value, and it's where a generous-sounding headline number gets its real shape.

The standard four-year schedule with a one-year cliff

The most common arrangement in tech is four-year vesting with a one-year cliff. The "cliff" is a minimum tenure before any equity vests: if you leave before your first anniversary, you walk away with nothing. Reach month twelve and 25% vests in a single chunk. After that, the remaining equity vests gradually — typically monthly or quarterly — over the next three years until you're fully vested at year four. So a 48,000-share grant on this schedule means roughly 12,000 shares at the one-year mark, then about 1,000 a month thereafter.

Why the cliff exists, and why it matters to you

The cliff protects the company from granting equity to someone who leaves almost immediately. For you, it sets a clear stake in the ground: the first year is all-or-nothing for your equity. If you're weighing an offer against your likelihood of staying, the cliff is a number to take seriously. It also matters in reverse, because if a company tries to push you out just before your cliff, that's a serious red flag worth surfacing during your evaluation and reference checks.

Variations to watch for

• Longer schedules. Some companies use five- or six-year vesting, or "back-weighted" schedules that vest more in later years. These stretch the time to full value, so read the fine print.
• No cliff or shorter cliffs. Some grants vest monthly from day one with no cliff, which is more candidate-friendly. Six-month cliffs also appear.
• Acceleration clauses. "Single-trigger" acceleration vests some or all of your equity automatically if the company is acquired; "double-trigger" requires both an acquisition and your termination. These materially affect what you'd keep in an exit — ask whether you have either.
• Refresh grants. Especially at larger companies, your initial grant is supplemented over time with new grants. We'll cover these in the public-company section.

What is my equity actually worth?

This is the question everyone wants answered, and there's a method for it. You can never know the future value of private-company equity — anyone who claims to is guessing — but you can compute a grounded present estimate and a percentage of ownership. To do it, you need a small set of numbers, most of which you must ask for.

The numbers to request

1. Your share or unit count. The actual number of shares your grant covers — not just a dollar figure or a percentage.
2. Total shares outstanding, fully diluted. The denominator. "Fully diluted" includes all shares plus options, warrants, and the unissued option pool, so it reflects real ownership.
3. The latest preferred-share price. What investors paid per share in the most recent funding round — the optimistic valuation.
4. The current 409A valuation. The independent appraisal of common-stock fair market value, which sets your strike and is usually lower.
5. Your strike price (for options). What you'd pay per share to exercise.
6. The vesting schedule. So you can value what's already earned versus what's still to come.

The two calculations that matter

Ownership percentage = your shares ÷ fully diluted shares. If you have 50,000 shares and the company has 50,000,000 fully diluted, you own 0.1%. This is the honest measure of your slice; a big share count means little without the denominator.

Today's paper value = (your vested shares × current share price) − (your vested shares × strike, for options). If 12,500 of your options have vested, the current common-share value is $4, and your strike is $2, your vested paper value is 12,500 × ($4 − $2) = $25,000 — on paper, illiquid, and pre-tax. For RSUs, drop the strike: 12,500 vested RSUs × $4 = $50,000.

One more honest note: the "headline value" computed at the preferred price is the most optimistic figure, and it's the one offers tend to feature. Build a range instead. Compute ownership percentage, then sketch a few exit scenarios — modest, good, great — by multiplying your percentage against plausible company valuations, remembering that dilution and liquidation preferences (which pay investors first) can reduce what common shareholders receive. The point isn't false precision; it's replacing a single seductive number with a sober range you can actually plan against.

Why paper value is not money — and how to hold both ideas at once

It's worth dwelling on the word "paper," because it does a lot of quiet work. A paper value is what your vested shares would be worth if you could sell them at today's estimated price. At a private company, you usually can't. There may be no buyer, no marketplace, and no permission to sell until a liquidity event. So a $120,000 paper value is real in the sense that the math is honest, and unreal in the sense that you cannot turn it into rent, groceries, or a down payment today. Both things are true at once, and good decisions require holding them together rather than collapsing into either "it's worth $120k!" or "it's worthless."

The discipline that follows is simple. When you compare offers, do not add paper equity to salary as if they were the same currency — they are not. Keep them in separate columns: guaranteed cash in one, risk-adjusted equity upside in another. When you imagine the equity's future, build a range with at least a plausible zero in it, because for many companies zero is the most likely single outcome. And when you feel the pull of a big headline number, ask the deflating but clarifying question: at what event, and on what timeline, does this paper become cash I can actually use? If the honest answer is "an exit that may never happen, years from now," you weight it accordingly. None of this means equity is bad. It means you treat it as what it is — a contingent claim on a future that hasn't happened — rather than as money already in the bank.

The 409A price vs. the preferred price

This single distinction explains most of the confusion around startup equity value, so it deserves its own section. Private companies effectively have two prices, and which one a recruiter quotes shapes how valuable your grant sounds.

The preferred price

When professional investors fund a startup, they buy preferred shares at a negotiated price per share in a funding round. That price reflects an optimistic, forward-looking valuation and usually comes with protective rights — notably a liquidation preference that pays investors back first in an exit. Multiplying your shares by the preferred price gives the rosiest, headline number. It's not meaningless — it's what sophisticated buyers paid — but it represents a best-case framing and ignores the preferences sitting ahead of your common stock.

The 409A valuation

The 409A is an independent, periodic appraisal of the fair market value of the company's common stock — the kind employees hold. It exists for tax and compliance reasons, it sets the strike price for new option grants, and it's almost always lower than the preferred price, because common stock lacks the protections preferred shares carry. Your strike is generally pegged to the 409A at grant.

Why the gap is the point

The space between your strike (set near the 409A) and the price a buyer eventually pays for common stock is, roughly, your option's upside. A low strike from an early 409A is a feature: it means more room for the value to grow. When you evaluate options, you want both numbers — the 409A that anchors your strike and the preferred price that signals investor optimism — so you can see the spread rather than fixate on the flattering end of it.

Dilution & the cap table

Dilution is the concept that most surprises people after they join, so understand it before you sign. When a company raises a new funding round, it issues new shares to investors. The total number of shares grows, but your share count usually stays the same, so your slice of the pie gets thinner. That's dilution.

Why dilution isn't automatically bad

It's tempting to read dilution as pure loss, but the math is subtler. A new round typically happens at a higher valuation, which can raise the value of your now-smaller percentage. Owning 0.1% of a company worth $50M ($50,000 on paper) can be better than owning 0.15% of the same company when it was worth $20M ($30,000). The new capital is also what funds the growth that creates the upside in the first place. So dilution is a normal cost of the company getting bigger, not a betrayal. What you're really evaluating is whether the company's trajectory outruns the dilution — whether each round's higher valuation more than offsets your shrinking percentage.

How to think about it when evaluating an offer

You can't predict future rounds precisely, but you can reason about them. Ask how much the company has raised and at what stage; a seed-stage company will dilute employees substantially across many future rounds before any exit, while a late-stage company is closer to its final cap table. Mentally haircut an early-stage percentage to account for rounds to come. And remember that your percentage matters less than the eventual value of your shares — a small slice of a large outcome beats a large slice of nothing.

Liquidation preferences: the term that sits ahead of you

Dilution thins your slice; liquidation preferences can change who gets paid from it first. When investors buy preferred shares, they typically negotiate the right to recover their money — sometimes a multiple of it — before common shareholders (you) see anything in an exit. In a strong outcome where the company sells for far more than was invested, this barely matters; there's plenty to go around. But in a modest exit, preferences can absorb much of the proceeds, leaving common shareholders with far less than a naive "ownership % × sale price" calculation suggests. This is why a company can be "acquired" in headlines while early employees receive little.

You don't need to master the legal mechanics to factor this in. Just internalize the principle: in disappointing or middling exits, money flows to preferred holders first, and your common stock is last in line. That's another reason to treat the optimistic, preferred-price headline value with caution, to favor a value range over a single figure, and to lean on fair cash rather than counting on a specific equity payout. If preferences are unusually heavy — a high multiple, or "participating" preferred that double-dips — that's worth knowing, and a transparent company will discuss it at a high level even if they don't hand you the full term sheet.

Strike price, exercise & the 90-day trap

For options specifically, two mechanics decide whether your grant translates into real money: the cost to exercise, and the window you have to do it after you leave. People lose hard-earned equity to these details every year, so read this section carefully.

The cost to exercise

To turn vested options into shares, you must exercise them — pay the strike price for each share. If you have 20,000 vested options at a $2 strike, exercising all of them costs $40,000 in cash, before any tax. At an early company with a low strike, this can be modest; at a later one, or with a large grant, it can be a serious sum you need to plan for. Exercising while the company is still private also means you're buying illiquid shares you can't yet sell — real money out, no money back until a future event.

The post-termination exercise window — the 90-day trap

Here's the term that catches people off guard. When you leave a company, you typically have a limited window to exercise your vested options or forfeit them. The traditional default is 90 days. That means within three months of departure you must come up with the exercise cost (potentially tens of thousands of dollars) and any associated tax bill — or lose the options you spent years vesting. For many people, that's not feasible, so they walk away from vested equity simply because they couldn't fund the exercise in time.

Some companies have moved to extended exercise windows — several years, or even the full option term — which dramatically reduces this risk and is far more candidate-friendly. This is one of the most consequential and least-discussed terms in any option grant, so always confirm it in writing before you sign. A short window doesn't make an offer bad, but it should change how you think about the equity's accessibility and your own financial planning.

Taxes: the part that surprises people

Taxes turn equity from a clean number into a thing you have to plan for, and they're where the unprepared get hurt. This is general education, not tax advice — rules vary by grant type, timing, and where you live, and you should confirm specifics with a qualified professional before you exercise or accept. But you need the shape of it to evaluate an offer.

RSUs: taxed at vesting

RSUs are generally taxed as ordinary income when they vest, on the full value of the shares delivered. At a public company that's manageable — you can often sell some shares to cover the tax. At a private company, vesting can create a tax bill on shares you can't sell, meaning you owe real cash for paper value. Some private companies use "double-trigger" RSUs that only deliver (and tax) on a liquidity event, precisely to avoid this. Ask which structure applies.

NSOs: taxed on exercise

Non-qualified stock options are taxed as ordinary income when you exercise, on the spread between the current value and your strike. Exercise 10,000 NSOs at a $2 strike when the shares are worth $6 and you've created $40,000 of taxable income that year, even if you can't sell the shares.

ISOs and the AMT wrinkle

Incentive stock options can receive favorable long-term capital gains treatment if you meet holding requirements — but exercising them can trigger the alternative minimum tax (AMT) on the paper spread between value and strike. People have been hit with large AMT bills on gains they never cashed out, especially when they exercised then the company's value fell. This is the single most important reason to get professional advice before exercising ISOs at a private company.

A worked tax illustration, so the danger is concrete

Numbers make this vivid. Imagine you hold 10,000 ISOs at a $1 strike, and after a few good years the 409A rises to $11. You decide to exercise all 10,000 while the company is still private. You pay 10,000 × $1 = $10,000 to buy the shares — manageable. But for AMT purposes, the "bargain element" is the spread: 10,000 × ($11 − $1) = $100,000 of paper gain, even though you've sold nothing and have no cash from it. Depending on your overall tax situation and jurisdiction, that $100,000 phantom gain can generate a substantial AMT bill due that year — paid from your savings, on shares you cannot sell. Now suppose the company's value later falls. You may have paid real tax on a gain that evaporated. This exact sequence has burned many people, which is why the unbreakable rule with ISOs is: model the tax before you exercise, and get professional advice.

The RSU version is gentler but still real. Say 5,000 RSUs vest at a private company when the shares are valued at $8. That's 5,000 × $8 = $40,000 of ordinary income reported that year, and you may owe tax on it despite being unable to sell a single share to cover the bill. This is precisely why some private companies use double-trigger RSUs that only vest-and-tax at a liquidity event — to spare employees a tax bill on illiquid paper. None of this is a reason to avoid equity; it's a reason to ask which structure you have and to keep cash in reserve for the years when vesting or exercise creates a taxable event. The surprise, not the tax itself, is what hurts people.

Reading the company's stage & runway

The same grant means wildly different things at different companies, so part of evaluating equity is evaluating the business behind it. You're not trying to become an investor; you're gauging the realistic range of outcomes and how much weight to put on the equity in your decision.

Stage shapes risk and upside

• Seed / pre-Series A. Highest risk, highest potential multiple, and the most future dilution to come. Equity is a long-shot bonus; weight cash heavily and only stretch on equity if you can absorb a zero.
• Series A–B. Some validation, still substantial risk and dilution ahead. Reasonable equity upside if the company executes; verify funding and growth.
• Series C and later. More established, lower (not zero) risk, closer to a final cap table. Often shifting to RSUs; a liquidity event may be more foreseeable.
• Pre-IPO / late-stage. Equity value is more estimable and sometimes partially liquid via tender offers. RSUs dominate; tax planning becomes central.
• Public. Equity has a real market price and is liquid (subject to vesting and trading windows). The cleanest to value.

Questions that reveal trajectory

Without prying, you can ask grounded questions: How much has the company raised, and when was the last round? What's the rough runway? Is revenue growing? How big is the team versus a year ago? These aren't impertinent — a candidate evaluating equity is expected to understand the business, and thoughtful questions signal sophistication. Pair what you hear with public information and your own company research to form a view. If you're earlier in your career, our guidance for professionals weighing leverage and efficiency can help you frame how much risk fits your stage of life.

Stage also shapes how you should weight the equity against everything else, and it's worth being explicit about the dial. At the earliest stages, the honest planning assumption is that the equity could be worth nothing, so it should function as a bonus you'd be delighted to receive but never built your decision around — your salary and the experience must justify the move on their own. As a company matures through later rounds, the outcome range narrows, a liquidity event becomes more foreseeable, and it becomes more rational to let equity carry real weight in the comparison. By the time a company is late-stage or public, the equity is close to ordinary, valuable compensation you can reason about with confidence. The mistake is applying the wrong weight for the stage: counting heavily on seed-stage options as if they were public RSUs, or dismissing late-stage equity as if it were a long shot. Calibrate the weight to the uncertainty, and your decisions will track reality instead of hope or fear.

Your own life stage matters as much as the company's. The same grant that's a sensible bet for someone with savings, no dependents, and years to recover from a zero may be reckless for someone supporting a family on a tight budget who needs every dollar of predictable income. There's no shame in either position — they call for different choices, not different character. Be honest with yourself about how a zero outcome would actually land in your life, and let that truth, not the excitement in the room, set how far you're willing to lean on equity. The right answer is personal, and the people who get it right are the ones who size the bet to a loss they could genuinely absorb.

Public-company equity & refresh grants

Not all equity is startup equity. If you're joining a public company or a large late-stage one, the dynamics shift in helpful ways, and a few new terms appear.

Public RSUs are the cleanest case

At a public company, RSUs vest into shares with a real, observable market price you can sell (within trading-window rules). Valuing them is straightforward — multiply vested units by the current price — and the main planning question is taxes at vesting and how concentrated you want to be in one stock. The uncertainty that dominates startup equity largely falls away; what remains is normal market risk in the share price.

Refresh grants and the "cliff" in total comp

Larger companies often grant a sizable RSU package up front that vests over four years, then issue refresh grants in later years. Because the initial grant front-loads, your equity income can dip in years three and four unless refreshes top it up — a pattern sometimes called the equity "cliff" in total compensation. When you evaluate a public-company offer, ask about the refresh philosophy: are refreshes routine and roughly what size, or is the initial grant the whole story? It materially changes your multi-year earnings.

ESPP — a quieter benefit

Many public companies offer an Employee Stock Purchase Plan that lets you buy shares at a discount through payroll deduction. It's not part of your grant, but it's a real, often-overlooked piece of equity compensation worth factoring into the whole picture. The best plans include a discount of meaningful size plus a "look-back" that prices your purchase off the lower of the price at the start or end of the period, which can make the effective discount substantial. When you weigh a public-company offer, ask whether an ESPP exists and how it's structured; it can quietly add several percent to your annual compensation.

The concentration question public-company employees forget

There's a risk unique to public-company equity that rarely gets discussed in the offer stage: concentration. As your RSUs vest year after year, an ever-larger share of both your income and your net worth becomes tied to a single company's stock — the same company that pays your salary. If that stock falls, you can take a hit to your paycheck's value and your savings at the same moment, precisely when you may be least able to absorb it. This isn't a reason to decline the equity; it's a reason to have a plan. Many people choose to sell vested shares on a regular schedule and diversify, treating each vest as cash rather than a conviction bet on their employer. You don't need to decide this at the offer stage, but it's worth knowing now so the equity strengthens your financial position rather than quietly concentrating your risk.

Equity vs. salary: the real trade-off

Eventually every equity evaluation collapses into one question: how much guaranteed cash am I willing to trade for a variable bet? There's no universal right answer — only the answer that fits your finances, your risk tolerance, and your belief in the company. But there's a disciplined way to think it through.

What each side really is

Salary is certain. It's money you can budget, borrow against, and build a life on, arriving every pay period regardless of how the company performs. Equity is a bet. It might be worth a great deal, a little, or nothing, on a timeline you don't control. Those are different kinds of value, and conflating them is how people get talked into bad deals.

A simple framework

• Cover your needs with cash first. Your salary should comfortably cover your real life — housing, obligations, savings. Don't accept clearly below-market pay on the promise of equity; an exciting grant doesn't pay rent.
• Size the bet to what you can lose. Treat equity as money that might go to zero. If a zero outcome would be financially fine, you can lean into equity. If it would be painful, weight salary.
• Let conviction set the dial, not hype. The more genuine, evidence-based belief you have in the company's trajectory, the more equity weight is rational. "It could be huge" from a recruiter is not evidence.
• Value the whole package. Salary, bonus, equity, benefits, and growth potential are one number. A strong base with modest equity can beat a thin base with a flashy grant.

This is exactly the kind of trade-off where a second set of expert eyes pays off. Marqee strategists help members benchmark the full package against the market for their role, level, and the company's stage, and weigh the equity soberly rather than emotionally — so the decision is made on evidence, not adrenaline. For the broader picture beyond equity, see our companion guide on how to evaluate a job offer beyond salary.

The questions to ask before you sign

You don't need to be an expert to evaluate equity — you need to ask the right questions and listen carefully to the answers. Here's the list our coaches walk members through. Asking these is normal, professional, and expected; a healthy company answers them without flinching.

The core numbers

• How many shares or units does my grant cover?
• What's the total number of shares outstanding, fully diluted?
• What was the price per share in the most recent funding round (the preferred price)?
• What's the current 409A valuation, and what will my strike price be?
• What percentage of the company does my grant represent today?

The terms

• What's the full vesting schedule, and is there a cliff?
• Are these options (ISO or NSO) or RSUs — and if RSUs, single- or double-trigger?
• What's the post-termination exercise window for vested options?
• Is there acceleration if the company is acquired — single- or double-trigger?
• Are refresh grants part of the picture, and roughly how do they work?

The company

• How much has the company raised, and when was the last round?
• What's the rough runway, and how is the business trending?
• Have there been any secondary sales or tender offers that let employees sell?

Get the consequential terms in writing — in the offer letter or the grant documents — not just in a verbal recap. If a recruiter can't or won't answer the core numbers, that's information: either the equity is being oversold or the process is informal. Either way, you've learned something useful before signing.

Red flags & reassuring signs

As you ask your questions, the way a company responds is as telling as the numbers. Here's how to read the signals.

None of these alone is necessarily disqualifying — small companies are sometimes just informal — but a cluster of red flags should lower the weight you place on the equity and raise your insistence on fair cash. Confidence and transparency around equity usually reflect confidence and transparency in the business.

There's a softer signal worth reading too: how the conversation feels. A company that treats your questions as reasonable — that walks you through the cap table, explains the gap between the two prices without defensiveness, and seems pleased rather than annoyed that you're being thorough — is showing you something about how it treats employees generally. A company that bristles, rushes you, or implies that asking is a sign you "don't believe in the mission" is also showing you something. You're not just evaluating an equity grant in these exchanges; you're sampling the culture you'd be joining. The equity conversation is one of the first real negotiations you'll have with this employer, and the tone often previews the next several years. Trust that signal alongside the numbers.

How to negotiate equity

Equity, like salary, is frequently negotiable, and candidates under-negotiate it because they don't feel equipped to. You now are. The grant size is the most commonly movable lever, and sometimes the vesting terms or exercise window can flex too.

Anchor in data and value

Ground your request in the market for the role, level, and company stage, and tie it to the value you bring. "Based on what I'm seeing for senior engineers at Series B companies, I'd like to discuss the equity component alongside base" is a professional, defensible opener. Negotiating equity thoughtfully signals that you understand compensation — something employers tend to respect, not resent.

What you can ask for

• A larger grant — the most common ask, often framed as bringing total compensation to market.
• An extended exercise window — increasingly granted and hugely valuable if your strike is meaningful.
• A shorter or removed cliff, or a more front-loaded schedule, where appropriate.
• A mix shift — e.g., a bit more base in exchange for slightly less equity, or vice versa, depending on your risk tolerance.

How to frame the ask without souring the relationship

The fear that holds people back from negotiating equity is that it will read as greedy or risk the offer. Done well, it reads as the opposite, as the mark of someone who understands compensation and takes the role seriously. The frame that works is collaborative, not adversarial: you're not fighting the company, you're trying to get to a yes you can fully commit to. Language like, "I'm genuinely excited about this team, and I want to make the numbers work so I can sign with conviction — can we look at the equity grant together?" keeps everyone on the same side of the table. You're inviting a joint problem-solving conversation, not issuing a demand.

A few principles keep it professional. Negotiate the whole package as one conversation rather than nickel-and-diming term by term across days. Make one clear, reasonable, data-anchored ask rather than a vague "can you do better." Always have a real reason — market data, a competing alternative, the scope of the role — rather than just wanting more. And once you reach agreement, take the deal graciously; re-trading a point you've already settled is the fastest way to damage goodwill before day one. The goal is a package you're happy with and a relationship that starts warm. Those are not in tension when the negotiation is handled with respect.

Negotiating well is a skill, and it's one Marqee coaches members through directly — benchmarking the package, scripting the conversation, and helping you ask with confidence and without burning goodwill. The same composure you bring to interview preparation carries straight into the offer conversation; the offer stage is just the final interview, and it deserves the same preparation. Used alongside disciplined recruiter outreach, strong alternatives are what give you genuine leverage to negotiate from.

A full worked example

Let's run the whole method on one realistic offer so the moves connect. You're offered a role at a Series B startup with this equity line: "40,000 stock options (ISOs), 4-year vesting / 1-year cliff." Exciting — but not yet evaluable. Here's how you turn it into a decision.

Step 1 — Gather the numbers

You ask, and the company shares: fully diluted shares outstanding = 40,000,000; latest preferred price = $5.00; current 409A = $2.00 (so your strike is $2.00); 90-day post-termination exercise window; no acceleration.

Step 2 — Compute ownership and a value range

Ownership %   = 40,000 ÷ 40,000,000          = 0.10%

Headline value (optimistic, preferred price):
              40,000 × $5.00                  = $200,000  (gross, pre-strike, pre-tax)

Net at preferred:
              40,000 × ($5.00 − $2.00 strike) = $120,000  (paper, illiquid)

Cost to exercise the full grant:
              40,000 × $2.00 strike           = $80,000   (cash you'd need)

Scenario sketch (ownership % × exit value, before dilution/preferences):
  Modest exit  $200M → 0.10% ≈ $200,000
  Good exit    $600M → 0.10% ≈ $600,000
  No exit               → $0

Step 3 — Stress-test it

Now the honest adjustments. As a Series B company, it will likely raise more rounds, diluting your 0.10% before any exit — so haircut those scenario figures. Liquidation preferences pay investors first, trimming what common shareholders get in a modest exit. The 90-day window means if you leave, you'd need up to $80,000 to exercise plus a possible AMT bill on the spread, within three months — a real constraint. And every figure is paper until a liquidity event that may never come.

Step 4 — Decide with eyes open

This isn't a bad grant — a low strike and real percentage at a validated company. But it's a bet, not a windfall, and the short exercise window plus future dilution temper it. The disciplined conclusion: make sure the salary is fair on its own, treat the equity as meaningful upside sized to risk you can absorb, and negotiate the exercise window if you can. You've converted a vague, thrilling line into a sober, defensible decision — which is the entire goal.

Glossary of key terms

Keep this beside you when you read an offer or a grant document. Every term below appears in real equity paperwork.

The pre-signature equity checklist

Run this before you sign any offer with an equity component. It's the same discipline our strategists apply when reviewing a member's offer.

• Type confirmed. You know whether it's options (ISO/NSO) or RSUs (single- or double-trigger), in writing.
• Count and denominator. You have your share count and the fully diluted total, so you can state your ownership percentage.
• Both prices. You have the 409A (your strike) and the preferred price, and you understand the spread.
• Vesting mapped. You know the schedule and cliff, and what vests when.
• Exercise window known. For options, you've confirmed the post-termination window and the cash it would take to exercise.
• Tax shape understood. You know roughly when tax hits and have flagged any AMT or private-share-tax risk for a professional.
• Company health checked. You know the funding history, rough runway, and trajectory.
• Cash is fair on its own. Your base salary stands up to market without leaning on the equity.
• Key terms in writing. The consequential terms live in the offer or grant docs, not just a verbal recap.

Equity isn't the enemy and it isn't a guaranteed jackpot. It's a conditional bet you can evaluate once you have the numbers and the vocabulary. Get the type, the count, the denominator, the prices, the vesting, the window, and the tax shape, make sure the cash stands on its own, and you can say yes (or counter) with clarity instead of crossed fingers. If you'd rather not navigate a high-stakes offer alone, that's the heart of what Marqee does: real career experts find the roles, run recruiter outreach and uncover warm referrals that create real alternatives, and help you decode and weigh every offer so you become a marquee candidate at the table. Explore our managed job search, see real member outcomes, learn more about your guide on the Marqee Editorial, or browse the full guides library and blog for more.

Frequently asked questions