The offer letter is open on your kitchen table. Base salary: $105,000 — about $18,000 below what you were making. Then there's a second line: "0.25% equity stake, estimated value $600,000 at current post-money valuation."
You do the math in your head. Six hundred thousand dollars. That's not nothing.
Before you sign, let me tell you about Ryan.
Ryan took a similar offer four years ago. Strong product, smart team, real traction. He accepted a salary $22,000 below market because the equity looked extraordinary on paper. Three years in, the company was acquired — a solid exit, leadership made out well. Ryan's equity payout: $0.
Not because the company failed. Because his options were common stock, the acquisition price fell below the liquidation preference stack, and the preferred shareholders — the investors — absorbed everything before common stockholders saw a cent. Ryan knew roughly what his equity was worth. He had no idea how it was structured.
This is the negotiation most people lose before they ever sit down at the table.
The Number on the Page Isn't What You're Being Offered
When a company tells you your equity is worth $600,000, they're doing one of two things: either they genuinely believe it (optimistic, not malicious), or they're using a big number to paper over a salary that isn't.
Either way, the figure on the page isn't what you're being offered. It's a calculation that assumes:
- The company reaches its current projected valuation or higher
- You're still there when it does
- Your stake hasn't been diluted by two or three more funding rounds
- The exit structure actually leaves something for common shareholders
- You've cleared your vesting cliff — usually a full year before you own a single share
Strip all of that out and you have a range of outcomes from "genuinely life-changing" to "you worked four years for nothing." That range is the actual offer. Your job, before you negotiate a single dollar, is to collapse it into something you can actually think about.
How to Actually Value What You're Being Offered
You don't need a finance degree. You need four numbers.
The grant size as a percentage. How much of the company? Always ask for the percentage — the raw share count is meaningless without knowing total shares outstanding. If a company refuses to give you a percentage, that's information.
The liquidation preference. How much do preferred shareholders (investors) get paid before common shareholders (you) see anything in an acquisition? A 1× non-participating preference is standard and fair. A 2× preference means investors receive twice their investment back before you touch a cent.
The current preferred share price. What investors paid in the last round. This gives you a rough secondary-market floor for valuation. Often disclosed if you ask directly.
The vesting schedule. Standard is four years with a one-year cliff — you own nothing until month twelve, then vest the rest monthly. Ask specifically whether there's acquisition acceleration. Without it, a buyout can cancel unvested shares entirely.
Here's the back-of-envelope math: take the company's last post-money valuation, apply your percentage, and that's your paper value before dilution. Now knock it down 30–40% for likely dilution from future rounds. Then ask: given the liquidation preferences in place, at what acquisition price do common shareholders actually participate?
A company with $30M in preferred investment and a 2× liquidation preference needs to sell for $60M before you see anything at all — regardless of what your equity is "worth" on paper.
Once you've done that math, you can make a real decision. Before that, you're just hoping.
When to Push for Cash and When to Take the Trade
Here's the part that surprises people: sometimes accepting below-market salary for equity is the right call. The key word is real equity.
At a pre-seed company with a founder you'd follow anywhere, a 0.5% stake with clean terms might genuinely be worth a salary discount. The math supports it, the relationship supports it, you're making a calculated bet.
At a Series C company with six rounds of dilution, a stacked liquidation preference, and equity representing 0.03% of a speculative number — no. The story isn't the asset. Push for cash.
The test is simple: run the math on a realistic exit, not the best-case one. If the equity doesn't move your financial life in any plausible scenario, it shouldn't move your salary floor either.
The thing most people miss: at large public companies or late-stage pre-IPO companies with a clear path to liquidity, RSUs are close to cash equivalents. They vest on a schedule, get taxed as income, and are worth what they're worth on any given Tuesday. If you're getting RSUs at a company that's already public or filing for IPO in the next 18 months, those are real compensation. Negotiate them exactly as you'd negotiate salary — with specific numbers, market comparisons, and no apologies.
Before you decide which way to push, you need to know whether the cash side of the offer is already fair. If you're taking below-market salary and speculative equity, that's two haircuts, not one. SalaryAsk benchmarks your base salary against role, experience, and location in a few minutes — so you know exactly where you stand before you get on the negotiation call.
How to Negotiate Both Sides Without Blowing the Offer
Most candidates pick one thing to negotiate. That's the wrong move when equity and salary are both on the table, because they interact. If you only push on salary, you leave equity terms unexamined. If you only ask about equity, you accept whatever cash they offered.
The conversation you want goes like this:
"I've looked carefully at the full package and I'm genuinely excited about the role. Before I sign, I want to make sure we're aligned on two things. I'd like to discuss bringing base salary to $[X] — my research puts market rate for this role and level at $[Y]. And I'd also like to understand the equity structure in more detail, specifically the liquidation preference terms and whether there's any acceleration on acquisition."
That second ask — the transparency ask — does double duty. It tells you whether the equity is worth anything. And it signals you're someone who's done the work. Most candidates don't ask those questions. Recruiters notice when someone does.
If they push back on salary with "the equity makes up for it," you have an answer ready:
"I'd like to believe that — and I might get there. Could you walk me through what happens to common shareholders in a typical exit scenario? Once I understand the structure, I'm in a much better position to weigh the full package."
They either answer it — in which case you learn something real — or they can't, which tells you everything. Companies that have good equity terms explain them without hesitation. The ones that deflect usually have a reason to.
For word-for-word scripts on handling salary pushback in these conversations, the negotiation scripts guide covers every response that keeps things moving without burning goodwill. If you'd rather handle the counter in writing, the salary negotiation email templates walk through how to counter with multiple variables at once — useful when you're juggling base, equity, and signing bonus simultaneously.
What Good Equity Terms Actually Look Like
If you're going to accept below-market salary in exchange for equity, here's what legitimate terms look like:
Standard vesting with a fair cliff. Four years, one-year cliff. Double-trigger acceleration on acquisition — meaning both a change of control and your role being eliminated trigger full vesting — is worth asking for at senior levels.
1× non-participating liquidation preference. Standard. Anything higher means investors take a bigger cut before you see anything. "Participating preferred" is worse — investors get their preference and then participate in the remaining proceeds alongside you.
Post-departure exercise window. Standard ISOs expire 90 days after you leave the company. Some companies now offer five- or ten-year post-termination exercise windows. That matters enormously if the company takes seven years to exit — with a 90-day window, you're either writing a large personal check to exercise or walking away.
Percentage disclosed upfront. If they'll only give you a share count with no total shares outstanding, that's not an equity offer. It's a number designed to sound bigger than it is. Ask for the percentage. Every time. Non-negotiable.
Most advice on this topic tells you to be excited about equity and figure out the details later. That's backwards. The details are the equity. The number on the cover page is just a headline.
If you're evaluating an offer right now and the equity component is making it hard to assess whether the base salary is fair — benchmark the cash side first. Whatever story the equity tells, the salary should stand on its own. If it doesn't, you're being asked to fund the company's optimism with your own pay.
FAQ
Should I always negotiate equity as well as salary? Yes — both are compensation, both are negotiable, and they interact. But use different frameworks. Salary negotiation is anchored to market data. Equity negotiation is anchored to structure and realistic exit scenarios. Treat them separately in your analysis, then bring them both into one conversation.
What questions should I ask about a startup equity offer? Ask for total shares outstanding (so you can calculate your actual percentage), the liquidation preference on preferred shares, the vesting schedule, whether there's acceleration on acquisition, and the post-termination exercise window. These aren't aggressive questions — they're the minimum information you need to make a real decision.
What is a fair equity percentage by stage? Rough benchmarks for full-time, non-founder hires: pre-seed or seed — 0.1–0.5%+ for senior hires; Series A — 0.05–0.2% for mid-to-senior; Series B and beyond — often 0.01–0.05%. The percentages shrink fast as the company grows. What makes them meaningful is the size and structure of the eventual exit, not the number itself.
Can I ask about equity structure without seeming difficult? Every time. Asking about terms is a sign you're serious and informed. Companies that want long-term employees should want people who've thought clearly about what they're signing. The candidates who skip the questions are the ones who feel burned three years later — not the ones who asked.