Employee equity is presented as a percentage or a share count, and neither figure means much without the terms attached.
Strike price
The amount paid to exercise the option.
Which is set at the valuation when the grant is made.
Options granted at a high valuation are worth nothing unless the company exceeds it.
Vesting and cliffs
Earning the grant over time with an initial qualifying period.
Which means leaving before the cliff means leaving with nothing.
The exercise window
How long after leaving the options can be exercised.
Which is commonly ninety days and is where most employee equity is lost.
Exercising requires cash and may trigger tax on paper gains.
Option types
Different tax treatments exist depending on jurisdiction and scheme.
Which produce materially different outcomes on exercise and sale.
Schemes with favourable treatment usually carry qualifying conditions.
Restricted stock units
Shares granted outright on vesting rather than an option to buy.
Which removes the strike price problem and creates a tax event on vesting.
These are more common in later-stage and public companies.
Liquidity
Private company shares cannot generally be sold.
Which means paper value stays paper for years.
Secondary sales exist at later stages and require company consent.
What to ask
Strike price, current valuation, total shares outstanding, vesting schedule and exercise window.
Which employers should answer and frequently are not asked.
A percentage without the share count and valuation is not information.
Extended exercise windows
Some companies allow years rather than months to exercise after leaving.
Which is a meaningful benefit and remains uncommon.
It is worth asking about and rarely volunteered.
Acceleration
Vesting speeding up on an acquisition.
Which may be automatic or may require termination as well.
Senior hires negotiate this; most employees do not know it exists.
Dilution
Later rounds reduce the percentage a grant represents.
Which is normal and means a percentage quoted at hire is not a promise.
Valuation figures
The headline valuation reflects preferred shares with protections attached.
Which means common shares held by employees are worth less than the arithmetic suggests.
This gap is the single most misunderstood point in employee equity.
The realistic expectation
Most startup equity is worth nothing, some is worth a little, and a small proportion is life changing.
Which is worth holding in mind when weighing it against salary.
Weighing equity against salary
Accepting less cash for a share of an uncertain outcome.
Which is a genuine trade and should be made with the actual numbers.
The equity is worth something in expectation and that expectation is frequently overstated by both sides.
Questions worth asking at offer stage
Total shares outstanding, the last valuation and its date, the strike price and the exercise window.
Which together allow an estimate.
Companies that decline to answer these are telling you something.
Refresh grants
Additional grants after the initial vesting period.
Which are how longer-tenured employees maintain a stake.
Their absence is a reason people leave at the four-year point.
Tax on exercise
Liability can arise on the gap between strike price and current value.
Which means tax on money not received, in some jurisdictions.
This has caused real financial harm to employees who did not anticipate it.
A general note
Tax treatment varies substantially by country and scheme, and professional advice is warranted before exercising anything significant.
Understanding the offer letter
The grant terms sit in a separate plan document rather than the offer.
Which means asking for the plan rules before accepting.
Reasonable employers provide them without objection.
Leaver provisions
Good leaver and bad leaver definitions.
Which determine whether vested shares can be retained or must be surrendered.
These clauses vary widely and are worth reading closely.
Company repurchase rights
The right to buy back shares from departing employees.
Which exists in many plans and at prices set by formula.
Tracking your own position
Grant dates, quantities, strike prices and vesting progress.
Which is your responsibility and is frequently not recorded anywhere personal.
Keep copies; companies change systems and records get lost.
The realistic framing
Treat equity as a possible upside rather than as compensation you are counting on.
Public company equity
Shares that can be sold, with a known price.
Which is a materially different proposition from private company equity.
Comparing offers across the two requires treating them as different instruments.
The one-line summary
Find out the share count, the valuation, the strike price and the exercise window before you accept.
A closing caution
None of this is prescriptive. Businesses differ by sector, by scale and by stage, and practices that work well in one context fail in another for reasons that are not always visible from outside.
What is consistent is that the businesses handling these questions well tend to have written something down, measured it in a defined way, and reviewed it on a schedule rather than when a problem forces the issue.
Where a decision carries legal, tax or employment consequences, professional advice specific to your jurisdiction is worth the cost, and this article is general description rather than advice.