Start by splitting the certain from the contingent
The first move is to stop treating the package as one number. Salary is contractual and arrives monthly. Equity in a private company is a claim on a future event that may not happen, on terms you do not control, at a time you cannot choose. Adding the two together produces a figure that is comfortable to quote and useless for deciding anything.
So evaluate the cash on its own first. Can you live on it, meet your obligations, and would you accept this role if the equity were removed entirely? That question is not rhetorical. It is the only reliable way to find out whether you are being paid for your work or being asked to fund the company's risk with a discount on your own salary. If the cash alone does not work, the equity has to be an investment you would knowingly make, and most people would not make it if it were presented as one.
Then look at the equity as a separate decision with its own probability attached. It is entirely rational to accept less cash for a meaningful stake in something you believe in. What is not rational is doing so without knowing what the stake is.
Interrogate the grant, not the headline
A quoted equity value is a calculation, and every input to it was chosen by the company. The number of units you receive is real; almost everything that turns those units into a currency figure is an assumption. The questions below are what convert the headline into something you can reason about, and asking them is normal at offer stage.
| What to ask | Why it changes the number |
|---|
| What instrument is this — options, restricted units, something else? | It determines whether you must pay to acquire the shares and when a tax event arises |
| What fraction of the company does the grant represent, and on what share count? | A percentage of a known total is meaningful; a currency figure alone is not |
| What price was used to value it, and when was that price set? | A value derived from the last funding round reflects that round's terms, not a market |
| What is the vesting schedule, the cliff, and is there any refresh in later years? | A large grant with a long cliff and no refresh can be worth less than a smaller renewing one |
| If I leave, how long do I have to exercise, and what would that cost? | A short window after leaving can force a choice between a large payment and losing everything |
| What is the preference stack ahead of ordinary shares? | Investors are frequently paid first, which can leave little for common holders in a modest exit |
| Has anyone been able to sell, and under what conditions? | Existing liquidity is the strongest available evidence that the paper can become money |
You will not get complete answers to all of these, and how much a company is willing or able to disclose varies. The reaction to the questions is itself informative: a company that answers the share-count and preference questions straightforwardly is telling you something different from one that repeats the headline figure.
The two things nobody mentions on the call
The first is that acquiring shares may cost you money, and the timing of that cost is often not yours to choose. Where the instrument requires exercise, leaving the company can start a limited window in which you must pay to keep what you earned. The size of that payment depends on the price you were granted at and the price the company is valued at when you exercise, so a grant that has appreciated substantially can create a genuinely difficult decision. Nobody explains this at offer stage because at offer stage nobody is thinking about your departure.
The second is tax, and here the honest answer is that it depends on where you are and what you hold. Tax treatment of equity compensation varies by country, by instrument, sometimes by scheme, and it changes over time. The events that can be taxable — grant, vesting, exercise, sale — differ between regimes, and so does the rate. Do not accept a recruiter's summary of your tax position as advice, and do not rely on a colleague's experience in a different country.
Where the amounts are material, take professional advice specific to your jurisdiction before you make an exercise decision. What you can do without any advice is ask the company which events they expect to be taxable in your location and whether they will withhold anything, because the answer tells you which questions to take to an adviser.
Where candidates get this wrong
The characteristic error is arithmetic performed on a hope. A candidate multiplies their unit count by the price from the last funding round, treats the result as compensation, and compares it against a competing cash offer as though the two were the same kind of thing. They are not. One is money and the other is a lottery ticket with a plausible story attached, and the comparison quietly assumes both a successful exit and that the price set in a private round is what an eventual buyer would pay.
A subtler error is neglecting the schedule. Two grants with identical headline values behave completely differently if one cliffs late and never refreshes while the other vests smoothly and is topped up annually. Over a realistic tenure, the refresh policy for years two, three and four often matters more than the size of the initial grant, and it is the component candidates least often ask about.
The last error is treating the equity conversation as one you cannot have. Asking about the share count, the preference stack and prior liquidity is a normal part of evaluating an offer, and being made to feel unreasonable for asking is a data point about the employer rather than about the questions.
Decide against the version where it is worth nothing
The test that resolves most of these decisions is simple and slightly bleak. Assume the equity comes to nothing at all, which for a meaningful share of private companies is what happens. Would you still take this role, at this cash, for the work, the people and what it does for your next move? If yes, then any equity outcome is upside and you can accept with a clear head. If no, then you are relying on the uncertain part, and the right response is either to move more of the package into cash or to decline.
Value the cash as pay and the equity as a bet you are choosing to place. The moment you add them into a single number, you have agreed to be paid in someone else's assumptions.
© 2026 Preptima. Originally published at preptima.com (opens in a new tab).