When to ask for equity, how much?


1

I am new to the start up world and doing well as a sales executive for the company who was given a base salary to start with no invested interest in the company. The base salary goes down on an annual basis because once we start bringing in revenue it will be all commission based. My question is, I forsee us to be very successful in the next 5 years and would be an idiot if I didnt approach my boss (the CEO and founder) regarding the possibilities of equity/shares within the company. We have the backing of couple investors, I am not sure how many shares he would have to give up, but I def want to be a part of it when it gets aquired and my boss walks off into the sunset with a lifetime of cash. I have a great relationship with him and things are moving along but I am interested to hear what others perspectives are on this. I appreciate the help.

Equity

asked Aug 4 '11 at 10:48
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Ones
6 points

3 Answers


1

The best time to ask for equity is when you are first hired. Once you've started, it becomes much more difficult to discuss unless,

  • you and your boss both agreed up front to defer talking about equity until a later date; say, after you've proved yourself through performance over time;
  • you're the only senior executive that does not have an equity package;
  • the company decides to create an option pool to cover all employees; or,
  • the is some pending event, like a sale of the company or a major investment, where you're cooperation is needed to help close the deal on favorable terms.

Other than situations like these, it gets a bit dicey to ask for equity after you've both agreed to your compensation framework.

answered Sep 7 '11 at 04:34
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Dmiller Conj
156 points

0

Before you start the job. VP of Sales typically get 1% -- 1.5% post Series A, vesting over 4 yrs.

answered Aug 4 '11 at 13:00
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Mitch
659 points

0

If you are playing a critical role then you should be comfortable asking. If you are doing as well as the next person it may be difficult. Is your salary on par with what you would get elsewhere? If not that is a good reason to discuss it, if you are getting paid competitively then you should try to get some equity over money. If you are new to the startup, there are already outside investors it won't be handed to you, they will need something in return

answered Sep 3 '11 at 14:02
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Ryan Doom
5,472 points

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