Negotiating equity compensation when being hired or promoted can be a possibility depending on your position and the company’s need. Grants of stock options, restricted stock, and restricted stock units (RSUs) can be structured to sweeten the deal as part of your employment agreement. However, it is essential to be realistic and well-informed before attempting negotiations. It is crucial to understand your importance to the company and what is negotiable in the grant offer. Most of the time, this negotiation power is reserved for C-level executives.
Understanding compensation trends in your industry can be beneficial when negotiating equity compensation. Researching trends within your field can provide valuable insight into what is standard practice. Consulting with an advisor who has knowledge of compensation practices within your industry can give you a competitive advantage. It is crucial to evaluate the equity grants you may be leaving behind before transitioning to a new company and to factor those into your negotiation strategy.
Knowing the best times to negotiate equity compensation, such as before hire or promotion, can provide leverage. Annual stock grants or off-cycle grants may depend on your performance and the company’s current situation. It is essential to focus on what is most important to you in negotiations. Factors such as salary, benefits, and equity compensation should be weighed against your financial needs and risk tolerance.
Protection at termination is a critical consideration when negotiating equity compensation. Understanding how your equity awards will be affected in the event of job termination is essential. Having an attorney review your employment agreement can help identify any problematic clauses and ensure your equity awards are protected. With private companies, negotiating compensation can be more challenging, and it is important to understand how to assess the value of your equity compensation in a private company.
Navigating negotiations with private companies may require a different approach due to the lack of publicly available information. Converting the number of shares to a percentage of ownership and understanding the fair market value of the stock are key considerations. Early-stage startups often offer stock options rather than RSUs, and it is important to consider the exercise price of the options when evaluating their value as compensation. Consulting with experts and utilizing resources available through platforms like myStockOptions.com can provide additional guidance on negotiating equity compensation and protecting it in job termination scenarios.
