Equity (Job Offer)

Equity compensation means the employer gives you ownership in the company in addition to cash pay. It's a way for companies (especially startups and high-growth tech) to compensate employees with future value that they don't have to pay in cash today. **Types of equity:** **RSUs (Restricted Stock Units)**: Grants of company stock that vest over time. Common at public tech companies. When you vest, you own the shares and can sell them. Tax treatment: ordinary income at vest. **Stock Options (ISOs and NSOs)**: The right to buy shares at a fixed 'strike price' in the future, regardless of the higher current price. If the company's stock price rises above your strike price, you profit. Common at startups. Value is theoretical until the company exits or goes public. **Common stock vs. preferred stock**: Employees typically receive common stock; investors get preferred. In downside scenarios (acquisition below valuation), preferred shareholders are made whole first — common shareholders (employees) may get little or nothing. **Vesting schedule**: How equity is earned over time. Most common: 4-year vest with a 1-year cliff (you earn nothing in the first year; after the first year you get 25% of your grant, then monthly vesting for the remaining 3 years). **Evaluating startup equity:** A '0.1% of the company' grant sounds meaningful but is only worth something if the company exits at a value much higher than its current valuation and you're not diluted below that threshold. Ask: What's the current company valuation? How much dilution has occurred? When did they last fundraise and at what valuation?