I've received an offer from a startup I'm excited about working for, and was wondering if anyone has tips on negotiating salary vs options. Here's the offer: $145k salary + the option to purchase 24k shares vested over 4 years, where (current share price - strike price) is about $1. I'm comfortable trading salary for stock, but how much is unreasonable? If I'm okay with $135k/year, how much stock should I ask for? 40k options since I'll be forgoing $40k in compensation over 4 years? Or only 10k because there are annual refreshers? If it's relevant, the company has less than 100 people and is worth around $50M. Thanks!
Shares outstanding?
Around 60M I believe.
Expected value of this stock is $20k. Given 24000 shares / 60MM shares = 0.0004 * $100MM. Divide it all by 2 since they will have more funding rounds and you get $20k. Did I miss something?
It depends on how much you believe in the company and the delta of the options (mostly based on the share price). If the options are $1 in the money (ITM) aka (current - strike) = $1 and the share price is $1.10, the shares are "deep ITM" and have a delta of about 1. This means that if the share price goes up $1, then the option is worth $1 more also. If the share price is much higher, though, like $100, then your $1 ITM options would have around 0.5 delta aka share price goes up $1, your option goes up $.50. Note RSUs have a delta of 1, so if you don't know the share price and they won't tell you, you can compute how many options you want based on how much delta (exposure: upside and downside potential) you want using 0.5 delta as a floor.
Expect for equity to have no value
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This might be a stupid question but don’t you get stock every year?
Aka y1 24k vest 25%, y2 18k+24k, 25% vesting etc? I would figure out how many options you get per year.. you’re probably not foregoing 10k a year
The options vest at 10%, 20%, 30%, 40% over the 4 years, with a 1-year cliff.