Equity Incentive Program

On an amortized basis, . 35% equity is $105,000 per year. On average, about 20% of companies that make it to Series A successfully exit, which makes the expected value of the equity portion $21,000 per year. This means that, in total, the average early startup employee earns $131,000 per year.

Never say a number first. Do your research. Know what parts of the equity grant are negotiable. See if you can negotiate other aspects of your offer. Know what you care about most.

Most grants of equity under an Equity Incentive Plan are subject to some form of vesting, with time-based vesting being the most common.Under this vesting structure, none of the equity vests until the one year anniversary of the vesting start date, at which point 25% of the equity vests (i.e., the one year cliff).

Broadly speaking, equity incentive compensation refers to the grant by a company to its key employees and service providers of an ownership stake.

Stock Options If you give your employee a Stock Option, you are basically giving them the promise of purchasing company stocks from you with a certain price. This price is normally better than one could ever find in the market. To give out equity in the form of stock options, you need to start with a stock option plan.

Evergreen. After two-and-a-half years with your company, Rachleff's WEP calls for annual grants to all your employees. Each grant should be equal to one quarter of what a new hire would be granted for the same role and experience.

Target the Audience. Similar to a marketing plan or a training plan, your incentive plan needs to be targeted to a specific audience. Establish SMART Goals. Offer Appealing Rewards. Align with Your Culture. Incorporate Training. Communicate, Track, Report, Communicate.

An example of incentive is extra money offered to those employees who work extra hours on a project. Incentive is defined as something that encourages someone to do something or work harder. An example of incentive is an ice cold beer at the end of a long bike ride.

Equity compensation is non-cash pay that is offered to employees. Equity compensation may include options, restricted stock, and performance shares; all of these investment vehicles represent ownership in the firm for a company's employees.