“0.5% equity” is meaningless without knowing the share count, the valuation, the strike price, and the vesting terms. Get all four before you compare offers, let alone sign one.

Vesting and cliffs

Standard is four years, monthly or quarterly vesting, with a one-year cliff. The cliff means you get nothing if you leave, or are let go, before twelve months; at month twelve, 25% vests at once, then the rest trickles in. This protects the company from someone leaving in month two with a chunk of equity, and it’s normal. Anything wildly different from this — a two-year cliff, a five-year vest — is a reason to ask why.

Strike price and the 409A

The strike price is what you pay per share to exercise your options, set by an independent 409A valuation. A low strike price relative to the current share value is good — it means more room between what you pay and what the shares might be worth. Ask for the current strike price and the date of the last 409A. If it’s over a year old, the number you’re being quoted might already be stale.

ISOs vs NSOs vs RSUs

Type	Who gets it	Tax trigger
ISO	Employees, early-stage common	Usually at sale, if held right
NSO	Contractors, some employees	At exercise
RSU	Later-stage or public companies	At vest

Most early-stage engineering offers are ISOs. The tax treatment can be favorable if you hold shares long enough after exercising, but that requires you to pay to exercise before there’s any liquidity, which is real cash risk if the company doesn’t work out.

The exercise window

Ask how long you have to exercise vested options after you leave. The old standard was 90 days, which forces people to write a real check, plus tax, just to keep equity they already earned, or walk away from it. Some companies now offer extended windows of 5 or 10 years. This detail matters as much as the headline percentage, and it’s rarely in the pitch.

Questions to ask before signing

1. What’s the fully diluted share count, and what does my grant represent as a percentage of that?
2. What was the last 409A valuation and when?
3. What’s the vesting schedule and cliff?
4. What’s the post-termination exercise window?
5. Is there any acceleration if the company is acquired?

The honest framing

Equity is a lottery ticket with real, if often small, positive expected value — treat it as upside, not compensation you can count on. Never take a below-market salary purely on the promise of equity without asking these five questions first. A company unwilling to answer them plainly is telling you something.

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