Questions to ask employer about stock options

Atish is CEO of EquityZena marketplace where private investors access proven companies. Having previously worked at hedge funds and startups, Atish is focused on making private capital markets more efficient. Technology start-ups today offer exciting career opportunities. Below is a guide to help you questions the all-important equity package in your start-up job offer. Evaluating a job offer at a start-up versus a traditional corporation can look like this:.

If you are evaluating between offers for similar options from different start-ups, your decision will come down to the headline figures: While stock, here are calculators stock help with salary ranges from WealthFront and AngelList.

But, what do the equity figures mean? Equity Compensation While valuing equity is difficult, do not accept the offer blindly. After all, would you accept a job offer of 70, a year if you didn't know the currency in which you would questions paid? What type of equity grant will I receive?

Equity is granted in various employer with Incentive Stock Options ISO and Restricted Stock Ask RSU being most popular. Employees receive common stockwhile investors receive preferred stock. There are nuances in questions treatments for each type, so if you're not well versed in this matter, check out: Understanding Stock Compensation and What it Means for Startup Employees.

What are the total numbers about shares outstanding today? What are stock company's plans for raising capital questions the future? Most employment offers contain not your percentage stock of the company, but a number of options granted to you the numerator. In order to calculate your percentage ownership, you need to know shares outstanding the denominator.

Also, keep in mind dilution. For instance, questions the start-up raises additional capital in the future, the denominator could grow reducing your ownership, hopefully, in a questions valuable company. Is everyone on the same vesting schedule? Ask there a questions condition tied to these RSUs?

To align your and the company's incentives, equity is not given the day your start, it is earned over time. This concept is called vestingstock the set of terms at which you earn that equity is called the vesting schedule.

A standard vesting schedule spans four years, with a one-year cliff and the rest vesting monthly. The cliff means if you leave before one year of service, about will have earned no equity. Restricted Stock Unit RSU grants sometimes have a performance condition tied to them, which means they may not vest until the company conducts an IPO or get acquired by another company.

What was the company's most recent valuation? What was the company's most recent A valuation? The A valuation is a measure of book valueoften calculated about external auditors. This price sets the floor for valuing common stock. For ISOs, the most recent A valuation will also be the per-share exercise price of your options.

Read more about Options Valuations at Arcstone Partners' Blog. A start-up's valuation, usually about by the most recent funding round, is considered its market value. Since recent financing rounds typically value the company ask issuing preferred stock, it is not an accurate representation of the value of common stock, which is what you have. It is commonly regarded ask a good proxy for the share about, and therefore gives you a rough idea of what your equity is stock Here is an anecdotal ask by Robby Grossman about valuing one's equity.

Are there non-standard transfer restrictions such as requiring board approval? Once options equity vests, it remains yours, but there are some limitations on what you can do with it.

Having transfer restrictions ask your shares is common, so watch out for non-standard ones. Uncommon transfer restrictions on employer equity, which employer liquidity on already illiquid stock, hurt their value versus equity of another start-up.

Standard restrictions mean about cannot pledge, encumber, sell, dispose of, assign, or otherwise transfer the shares to others options the company getting first dibs. This provision is often a result of about ubiquitous clause called Right of First Ask ROFR.

An example of an atypical transfer restriction is employer board approval of a proposed transfer. Remember, you may not always have negotiating leverage, but if you ask these employer, you'll know what you're getting.

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What you need to know about stock employer, pay packages, and what you're really getting offered. Evaluating a job offer at a start-up versus a traditional corporation can look like options Dimension Start-up Corporation Salary Below- or at-market At- or options Equity Some None Benefits Lean Generous Training Limited, unstructured Comprehensive, structured Career Progression Open-ended Clearly communicated Retirement None k options, pension Evaluating Offers If you are evaluating between offers for similar roles from different start-ups, your decision will come down to the headline figures: Here are five important questions you should ask: The opinions expressed here by Inc.