SaaSslinger4ever

Sr Enterprise Account Executive

Equity in Company

Ok, I'm considering a switch to another company and the overall compensation, ie $300k USD OTE, is equal to current. New company is firm on the base, $150k USD. However, new company is offering equity. Naturally, hard to really know what the value is but hearing the equity that will be giving to me could be worth between $80k and $100k USD.

I would like to negotiate for more equity. So, two advice questions:

Who on here has done this before and what are so negotiation tips for doing so?
OR.....would it be better to negotiate for additional equity based upon "future" growth?

Appreciate the insights!

💰 Compensation

📳 SaaS

📉 Equity

22 comments

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poweredbycaffeine

WR Lieutenant

☕️

Best equity negotiation tactics: 100% vesting at 1 year cliff OR fully accelerated vesting upon liquidity event (acquisition or IPO, etc).

Make them give it all nearly up front or make them promise that you’ll get paid out on all equity when it counts and not just the vested shares.

saaskicker

Celebrated Contributor

Enterprise AE

this is the way - most times the amount of equity is not something they can typically increase, but you can negotiate the terms of when the equity comes available to you.

Gasty

Notable Contributor

War Room Community Manager

Justatitle

Big Shot

Account Executive

Ask if they’re open to equity being increased based on goals being met. Honestly equity should be looked at as a lotto ticket. Likely won’t hit but if it does it’s awesome. Also the equity they give you today will likely be worth more in 5 years when they sell/go public.

punishedlad

Tycoon

Business Development Team Lead

This ^^^^^

Maximas

Tycoon

Senior Sales Executive

I second this!

Maverick504

Valued Contributor

Director of Business Development

In theory yes, but make sure your shares don’t dilute by them adding members to the equity pool. If they do, your share value might not be as good as it seems, unless the company ls value takes off and they don’t add many members to the equity pot.

CuriousFox

WR Officer

🦊

What about asking for a higher base?

SaaSslinger4ever

Fire Starter

Sr Enterprise Account Executive

@CuriousFoxIt appears they are being very firm on the offered base and not willing to go up. This is why I think negotiating for more equity or even signing bonus could be in my favor. They are structuring the the OTE variable for the first 3 quarters to be tied to non-revenue targets and making it easy to hit.

braintank

Politicker

Enterprise Account Executive

Go for signing bonus

Sunbunny31

Politicker

Sr Sales Executive 🐰

^^ I agree with this, as you'll most likely have a period where you won't be making your commission just yet and you'll want to offset that as much as possible.

GDO

Politicker

BDM

was my first thought as well

buckeyenation

Acclaimed Answer

nononoono. everyone shuttup. Not one of you has mentioned the important shit like alternative minimum tax aka AMT on ISOs.
Do you realize that if you leave the company, and its still private, and you exercise the options to hold them until a liquidity event, you will still have to pay tax ON THE PAPER GAINS if you hit certain thresholds. The company reports on form 3921 what the fair value of the company is (on a per share basis), and based on that number, minus your cost to exercise, you might be liable for taxes on those PAPER profits. Brutal.
This can be a GIANT cluster fuck.... say you accept the offer, are stoked, and the equity grows in value over time. one day, prior to liquidity event, you leave. you exercise options, but are then hit with a massive tax bill and can't do shit about it because the shares are illiquid for a private company.
you can't afford the 50k in tax on a company you have no idea where its headed - and have only paper gains to show. so you forfeit the shares. Ok, you owe nothing, but get nothing for all your time spent. PLEASE look into this before you think its a fair deal for your time.
If you could negotiate a 1-2 exercise period upon parting with the company, its worth a shot. If not, you are forced to pony up exercise money in usually a 90 time frame. brutal.
IF you take the offer, exercise the shares in increments each year thereby reducing your tax burden to potentially 0 each year. only certain amounts relative to w2 income trigger AMT.
PLEASE PLEASE PLEASE look up AMT before caring about anything else. I have seen horror stories.
Signed, founder.

SaaSslinger4ever

Fire Starter

Sr Enterprise Account Executive

@buckeyenation Great insight!

braintank

Politicker

Enterprise Account Executive

Unless they're series D or later it doesn't matter. Negotiate for signing bonus or higher base. Equity is a crap shoot.

TennisandSales

Politicker

Head Of Sales

I would not make a move based on equity.

What kind of equity is it?
RSU?
ISO?

There are A TON of questions you need to ask. Use the search bar for that, it’s been chatted about a ton.

poweredbycaffeine

WR Lieutenant

☕️

Don’t forget common options. The most common for pre-C startups. Worth almost nothing compared to preferred stock that investors get.

Gasty

Notable Contributor

War Room Community Manager

I think this is a topic we don't discuss too often in the War Room.
I think we should do something to change this.

finboi

Notorious Answer

Fi-nance

Literally ignore equity and focus on cash comp. Esp in this current environment I would prioritize certainty.

Mendizo

Opinionated

Sr. Director

As a couple of others have mentioned, it's impossible to judge the value of equity without knowing more about the company. One thing you can try doing if this is a more well-known private company is to sign up for one of the secondary equity trading markets, where people go to sell/buy equity before an IPO. If you're lucky, the company will be listed and you can get a sense of what people value the equity at currently.
Taking a step back, I always advise people to think about equity based on your risk profile. For those with a lot higher risk appetite (including less need for cash), opting for more equity or faster vesting in a growing business can be worth literally dozens to hundreds of times more down the road. But, there's also a big chance it'll be worth zero. So, what is your risk profile?
On the topic of amount of equity, that is likely going to be tough to increase. That's usually not something the hiring team has much say in, and especially if you're an AE, that's going to be fairly limited (versus if you're in management which gets more equity). But negotiating the terms of the equity such as vesting is definitely an option.
At the end of the day, equity in the near term will be a fraction of your compensation. I personally would also be making sure to ask about the percentage of AE's who make or exceed plan, what the average take-home is, if they have commission caps, etc. You have a much better chance (and it's more within your control) at overachieving on your plan and taking home a big cash pile that way.

irojas

Personal Narrative

CRO (Chief Revenue Officer)

Looks like you still have a long way to negotiate even to get to $300k, with the risk factor of equity.
If you are hitting your targets and getting $300k, I would ask when can you cash in the equity and if there’s any event that triggers it.

kelvin26

Fire Starter

administrative manager

https://timebrookinvestment.com/u/sign_up?r=kryptotitan

https://t.me/+L_3GDbXlz904MDg0

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SaaSslinger4ever

Equity in Company

22 comments

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