Equity Compensation

Equity compensation grants employees an ownership stake in the company, typically through stock options (ISOs or NSOs), Restricted Stock Units (RSUs), or direct stock grants. In the tech and startup ecosystem, equity is a core component of total compensation, particularly for early-stage companies that may offer below-market base salaries offset by significant upside potential.

Understanding equity requires evaluating multiple factors: the type of grant, vesting schedule (typically four years with a one-year cliff), strike price vs. fair market value, dilution potential from future funding rounds, and tax implications (409A valuation, AMT for ISOs, capital gains treatment). Candidates at different career stages and risk tolerances weight equity differently.

Modern recruiting platforms that include equity data in compensation benchmarking help both companies and candidates make more informed decisions. By surfacing equity ranges alongside base salary and bonuses, platforms reduce compensation mismatches and accelerate offer negotiations.