- Do not take a pay cut to work at a startup. Most startups that are worth working at are well-capitalised and should be able to pay market salaries.
- If you are going to be granted ISOs (Incentive Stock Options) (you must ask to find out if this is the case), then it may be worthwhile only if combined with a) a low strike price, b) early exercise and c) a section 83(b) election. NSOs are generally not granted to full-time employees.
- Look out for funky triggers in the options contract. Ask management up front if they have any nonstandard clauses in their contract, and pay a lawyer to verify this. If there is dishonesty or lack of clarity on this, run.
- Look out for funky vesting schedules. Typical vesting schedules are 25% upon completion of 1 year (you get nothing if you leave within a year of joining) and 1/48th of the total grant every month thereafter. Sometimes the vesting happens quarterly, but not often (it's more common with RSUs + larger numbers of shareholders). Backloaded vesting schedule? Run.
- Time to exercise after termination of employment: this is usually a month or 90 days, but a few companies are beginning to offer generous 10-year expirations. Take note of what this period is and decide if you can scrape up the money to exercise the options if you decide to exit at a chosen time in the future (or if you are fired).
Having satisfactory answers on the above is a pre-requisite to negotiating numbers. I'd walk away if they are not met.
- Do not take a pay cut to work at a startup. Most startups that are worth working at are well-capitalised and should be able to pay market salaries.
- If you are going to be granted ISOs (Incentive Stock Options) (you must ask to find out if this is the case), then it may be worthwhile only if combined with a) a low strike price, b) early exercise and c) a section 83(b) election. NSOs are generally not granted to full-time employees.
- Look out for funky triggers in the options contract. Ask management up front if they have any nonstandard clauses in their contract, and pay a lawyer to verify this. If there is dishonesty or lack of clarity on this, run.
- Look out for funky vesting schedules. Typical vesting schedules are 25% upon completion of 1 year (you get nothing if you leave within a year of joining) and 1/48th of the total grant every month thereafter. Sometimes the vesting happens quarterly, but not often (it's more common with RSUs + larger numbers of shareholders). Backloaded vesting schedule? Run.
- Time to exercise after termination of employment: this is usually a month or 90 days, but a few companies are beginning to offer generous 10-year expirations. Take note of what this period is and decide if you can scrape up the money to exercise the options if you decide to exit at a chosen time in the future (or if you are fired).
Having satisfactory answers on the above is a pre-requisite to negotiating numbers. I'd walk away if they are not met.