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How do you allocate equity to employees?

How do you allocate equity to employees?

Here are the five steps to offering startup employee equity:

  1. Create an employee stock option pool, or ESOP.
  2. Choose the type of equity to grant.
  3. Determine the vesting period.
  4. Decide how much equity to assign to each employee.
  5. Document startup employee equity in a cap table.
  6. Reap the benefits.

How do you evaluate startup compensation?

Consider the whole package — not just salary. Compensation goes beyond your paycheck. When weighing a job offer, look at factors like bonuses, equity grants, health care and retirement plans, transportation costs, schedule flexibility (e.g., working from home and vacation time), and potential for growth at the company.

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How do you divide equity among startup founders?

Summary

  1. Rule 1) Try to split as equaly and fairly as possible.
  2. Rule 2) Don’t take on more than 2 co-founders.
  3. Rule 3) Your co-founders should complement your competencies, not copy them.
  4. Rule 4) Use vesting.
  5. Rule 5) Keep 10\% of the company for the most important employees.

What is a salary equity adjustment?

Equity Adjustment – An increase to base pay where an employee’s education, experience, salary history and skills are substantially similar to other employees in the same work unit.

Where can I find salary and equity compensation data for startups?

Both AngelList and Wealthfront offer an interactive tool where you can sort salary and equity compensation by position, skill level, and location. Ackwire, an online database of anonymous start-up salaries and equity, allows you to sort a similar set of data also by company valuation and head count.

What are the benefits of equity compensation for startups?

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Often this leads to startups hiring junior employees, which then leads to poor performance. Equity compensation allows you to hire senior employees for the cost of junior ones. E.g. at Senstone we hired a $5000/month engineer for $1500/month salary (in Ukraine) Gives a sense of ownership to your team.

What is an equity increase in salary?

An equity increase is a permanent increase to the base salary that may be granted to an employee under certain circumstances, such as increased duties that do not warrant a reclassification or a significant salary lag to comparable internal positions or the local labor market.

How do you measure “market rate” equity compensation?

To help you gauge “market rate” for your equity compensation, there are some free benchmarking resources. Both AngelList and Wealthfront offer an interactive tool where you can sort salary and equity compensation by position, skill level, and location.