Equity size for senior engineer


0

what is a reasonable equity size for very senior engineer (12-13 yrs) at a 20-40 person startup, the startup is supposedly profitable and has not gone through funding rounds yet and has been around for a couple of years. the vesting plan is 5 yrs

re phrasing.
company valuation unknown??
shares outstanding b/w 30-40 mil
no funding rounds yet.
profitable company.
reasonable salary offered
options are offered not grants

Equity Mobile Apps

asked Aug 6 '11 at 02:38
Blank
User549164
8 points
  • A "how long is a piece of string" question. What is the contribution of the senior engineer, what are the contributions of other people, how much equity is there, how little can you get away with paying, how much are you giving other people, what is the objective of giving away equity, ... – Mike 9 years ago
  • As Mike has said, there is nowhere near enough information in you question to give any sort or reasonable answer. This question is essentially the same as asking, "What is a reasonable salary for someone living on earth." Even if there was enough information to start to formulate an answer, the answer would be subjective. – Gary E 9 years ago
  • @Mike added more information – User549164 9 years ago
  • I think you still need to answer the question: what is the objective of giving away equity. Presumably the answer is "golden handcuffs" in which case the answer is "as much as is needed / as little as necessary provided it's not more than he/she is worth to the company." Not helpful, I know, but it's still an impossible question for an outsider to answer. We can only really hint at the criteria that might be used to decide how much. – Mike 9 years ago
  • I decided not to take the offer, the company was offering .15% of the company but I think it fit the description of lifestyle company – User549164 8 years ago

1 Answer


2

This doesn't sound like a startup to me. You're saying company has 20-40 employees, no outside investment, and is profitable.

That's a founder's home run.

Anyhow, usually, stock options are part of the risk premium of joining a biz that has a dangerous future.

But in this scenario, there's way less risk!

How many stock options would this engineer get if he joined Microsoft or Google or Facebook? He'd get a few (probably).

If I were a founder, I would look at employee stock ownership plans at places like that and then design a plan like theirs.

Frankly, I think the smarter move is to design some kind of profit sharing program, rather than stock options.

This company looks like a lifestyle biz; why would the founders ever sell it? I know I wouldn't.

And if the founders never sell, those options are worthless.

answered Aug 7 '11 at 23:06
Blank
W. Matthew Wilson
104 points
  • He asked about equity, not options. But it's a very good point that a minority shareholding in a profitable private company may be worth little unless profits are paid out as dividends (rather than retained in the business) or the company sold. This is something the senior engineer on the other end of the transaction should be aware of. – Mike 9 years ago

Your Answer

  • Bold
  • Italic
  • • Bullets
  • 1. Numbers
  • Quote
Not the answer you're looking for? Ask your own question or browse other questions in these topics:

Equity Mobile Apps