Negotiating equity starts with understanding what you’re actually being offered, then using that knowledge to ask for more, better terms, or both. Unlike salary, where the number on the offer letter is straightforward, equity requires you to dig into several layers of detail before you can judge whether a grant is generous, standard, or underwhelming. The good news: most candidates never push back on equity, which means there’s often more room to negotiate than you’d expect.
Find Out What the Offer Is Really Worth
An equity offer that says “10,000 shares” is meaningless without context. Before you negotiate, you need to convert that number into something you can actually evaluate. Ask the company these questions before your next conversation:
- Total shares outstanding (fully diluted): This tells you what percentage of the company your grant represents. “Fully diluted” means it includes all shares that could exist, including those reserved for future employees, convertible notes, and warrants. If the company only gives you the number based on currently outstanding shares, your actual ownership percentage is smaller than it appears.
- Most recent valuation: Ask what the last funding round valued the company at (preferred share price times total outstanding shares). This gives you a rough dollar figure for your grant on paper.
- 409A valuation: This is the independently assessed fair market value of common stock, which determines your exercise price if you’re getting stock options. A lower 409A relative to the preferred price means a bigger spread between what you pay and what the shares could be worth.
- Aggregate liquidation preference: This is the total amount investors get paid before common shareholders (including you) see a dollar in an exit. If the company has raised $50 million with a 1x liquidation preference, the company needs to sell for more than $50 million before your common stock has any value. Ask directly: what exit valuation is needed before common stock has positive value?
Companies that dodge these questions are waving a red flag. Any employer serious about using equity as compensation should be transparent about what that equity represents.
Know the Market Benchmarks
What counts as a “good” equity grant depends heavily on the company’s stage and your role. The numbers shift as companies mature because later-stage equity carries less risk and, usually, less upside per share.
At early-stage startups (pre-seed through seed), equity is typically expressed as a percentage of company ownership. A mid-level software engineer might receive around 0.014% of the company, while a mid-level sales role might see roughly 0.011%. These percentages sound tiny, but at a company worth $10 million, 0.014% is $1,400 in paper value today with significant growth potential.
At growth-stage startups (Series A and B), grants are often benchmarked as a percentage of base salary. A mid-level engineer’s annual equity grant might represent about 8.5% of base salary, while a director-level engineering manager could see around 13.4%. At late-stage companies (Series C and beyond), those percentages climb: a mid-level engineer’s grant might run about 15% of base salary, reflecting the lower risk and higher share price.
These benchmarks, based on Ravio’s January 2025 data, give you a starting point. If your offer falls well below the median for your role and stage, you have a concrete, data-driven reason to ask for more.
Understand Your Vesting Schedule
Equity grants almost never belong to you on day one. The industry standard is a four-year vesting schedule with a one-year cliff. That means you receive nothing if you leave before your first anniversary. On your one-year mark, 25% of your grant vests at once, and the rest vests monthly or quarterly over the remaining three years.
At least 95% of cliffs are set at one year, so you’re unlikely to negotiate this away entirely. But you can negotiate around the edges. If you’re leaving a job where you have unvested equity, ask for a signing bonus or accelerated vesting on a portion of your grant to offset what you’re giving up. Some candidates successfully negotiate a shorter overall vesting period (three years instead of four) or a front-loaded schedule where more shares vest in years one and two.
Acceleration Clauses
If the company gets acquired before your shares fully vest, what happens to your unvested equity? Without an acceleration clause, the acquiring company can restructure or cancel your remaining grant. A double-trigger acceleration clause protects you: your unvested shares accelerate (vest immediately) if two things happen. First, the company is acquired. Second, you’re terminated without cause after the acquisition. Double-trigger is far more common than single-trigger because acquiring companies don’t want the entire team to cash out and leave on day one. It’s a reasonable ask, especially for senior roles, and it costs the company nothing unless an acquisition actually happens.
What to Negotiate and How
Equity negotiation isn’t just about asking for a bigger number. There are several levers you can pull, and knowing which ones matter most for your situation gives you flexibility.
- Number of shares or percentage: The most straightforward ask. If the offer is below the benchmark for your role and stage, say so. “Based on market data for this role at a Series A company, I’d expect equity closer to X%. Can we close that gap?”
- Exercise window: Stock options typically expire 90 days after you leave the company, meaning you’d need to come up with cash to buy your vested shares within three months of departing. Some companies now offer extended exercise windows of up to 10 years. This is a meaningful benefit that costs the company very little and can save you tens of thousands of dollars if you leave before an exit.
- Refresh grants: Your initial grant vests over four years. What happens in year two or three? Ask whether the company offers annual refresh grants to keep your total equity compensation competitive as you stay longer.
- Early exercise: Some companies allow you to exercise options before they vest. This can be a significant tax advantage if you do it when the share price is low, since you start the clock on long-term capital gains treatment earlier.
Frame your negotiation around the total compensation package. If the company can’t move on salary, they may have more flexibility on equity, or vice versa. Saying “I’m excited about this role and want to make the total package work” keeps the conversation collaborative rather than adversarial.
Know the Tax Implications Before You Agree
The type of equity you receive determines when and how much you’ll owe in taxes. The two most common forms of stock options have very different tax profiles.
Incentive stock options (ISOs) get favorable tax treatment. You owe no regular income tax when you exercise them. If you hold the shares for at least two years after the grant date and one year after exercising, any profit is taxed at long-term capital gains rates, which are lower than ordinary income rates. The catch: exercising ISOs can trigger the alternative minimum tax (AMT), a parallel tax calculation that treats the spread between your exercise price and fair market value as income even though you haven’t sold anything or received cash. This can create a surprise tax bill in the year you exercise. There’s also a cap: only the first $100,000 worth of ISOs that become exercisable in a single calendar year qualify for this preferential treatment. Anything above that threshold is automatically taxed like an NSO.
Non-qualified stock options (NSOs) are simpler but more expensive upfront. When you exercise an NSO, the difference between the fair market value and your exercise price is taxed as ordinary income immediately. Your employer withholds federal, state, and payroll taxes just like they would from your paycheck. Any additional gain when you eventually sell is taxed as a capital gain.
If you have a choice, ISOs are generally more tax-efficient for employees, especially if you can plan your exercises to manage AMT exposure. When evaluating an offer, ask which type of options you’re receiving. This single detail can change the after-tax value of your equity by thousands of dollars.
Timing Your Negotiation
The best time to negotiate equity is after you have a written offer but before you’ve accepted it. At this point, the company has invested time and resources in choosing you, and they’re motivated to close. Negotiating equity alongside salary in the same conversation is fine and often preferable, since it lets you trade off between the two.
If you’re already employed and the company is raising a new round, that’s another natural moment. A new funding round changes the company’s valuation and dilutes existing shareholders, including you. It’s reasonable to ask for a refresh grant that accounts for dilution, especially if your original grant was sized based on an earlier, lower valuation.
For senior hires and executives, equity negotiation often involves legal review of the stock option agreement or restricted stock purchase agreement. Pay attention to clauses about repurchase rights (can the company buy back your vested shares if you leave?), transfer restrictions, and any non-compete provisions tied to your equity. These details matter as much as the number of shares on the page.
Putting It All Together
Walk into the negotiation with three things: a clear understanding of what percentage of the company you’re being offered, a market benchmark for your role and stage, and a specific counteroffer that accounts for the total package. Calculate the paper value of your grant by multiplying your ownership percentage by the company’s last valuation, then subtract the liquidation preferences to see what your shares might realistically be worth in an exit scenario. Compare that to what you’d earn in additional salary or a cash bonus at a larger company. This math gives you a concrete sense of whether the equity is a meaningful part of your compensation or just a lottery ticket, and it gives you the language to have a grounded, specific conversation with your future employer.