Typical Employee Equity Levels — from The Holloway Guide to Equity Compensation

The following excerpt is from The Holloway Guide to Equity Compensation, a detailed reference with hundreds of resources on stock options, RSUs, job offers, taxes, and more. You can read more from this excerpt, or access the full guide text here.

THE FULL VERSION OF THIS GUIDE ANSWERS QUESTIONS LIKE:

How much should an intro-level engineer expect in equity compensation from a startup?

What is the standard for equity compensation levels at startups?

What are typical benchmarks for equity in early-stage startups?

What an employee receives in equity, benefits, and cash depends on the role he or she fills, the sector he or she works in, where the company is located, and the possible value that specific individual may bring to the company. Compensation data is highly situational.

Any compensation data out there is hard to come by. Companies often pay for this data from vendors, but it’s usually not available to candidates.

For startups, a variety of data is easier to acquire. This Guide gives some overview of early-stage Silicon Valley tech startups, but keep in mind these numbers are not representative of companies across the country:

• Seed-funded startups would offer higher equity — sometimes much higher if there is little funding, but base salaries will be lower.
• One of the best ways to tell what is reasonable for a given company and candidate is to look at offers from companies with similar profiles on AngelList. The AngelList salary data is extensive.
• For post-series B startups, equity numbers would be much lower. How much lower will depend significantly on the size of the team and the company’s valuation.
• José Ancer gives another good overview for early stage hiring.
• Founder compensation is another topic entirely that may still be of interest to employees. José Ancer provides a thoughtful overview.

Leo Polovets created a survey of AngelList job postings from 2014, an excellent summary of equity levels for the first few dozen hires at these early-stage startups. For engineers in Silicon Valley, the highest (not typical!) equity levels were:

• Hire #1: up to 2%–3%
• Hires #2 through #5: up to 1%–2%
• Hires #6 and #7: up to 0.5%–1%
• Hires #8 through #14: up to 0.4%–0.8%
• Hires #15 through #19: up to 0.3%–0.7%
• Hires #21 [sic] through #27: up to 0.25%–0.6%
• Hires #28 through #34: up to 0.25%–0.5%

There are no hard and fast rules, but for post-series A startups in Silicon Valley, the table below, based on the one by Babak Nivi, gives ballpark equity levels that many think are reasonable. These would usually be for restricted stock or stock options with a standard 4-year vesting schedule. They apply if each of these roles were filled just after an A round and the new hires are also being paid a salary (so are not founders or employees hired before the A round). The upper ranges would be for highly desired candidates with strong track records.

• Chief executive officer (CEO): 5–10%
• Chief operating officer (COO): 2–5%
• Vice president (VP): 1–2%
• Independent board member: 1%
• Director: 0.4–1.25%
• Lead engineer 0.5–1%
• Senior engineer: 0.33–0.66%
• Manager or junior engineer: 0.2–0.33%