Equity Negotiation for Remote Workers: ISOs, RSUs & Stock Options (2026)

Too many remote workers dismiss equity as “lottery tickets” and fail to negotiate it seriously. This is a mistake. At competitive tech companies, equity represents a substantial portion of total compensation—sometimes exceeding base salary in value. The fact that equity is uncertain doesn’t mean it’s worthless; it means you need to evaluate and negotiate it with an understanding of risk.

For remote workers, equity negotiation carries additional complexity. International employees face different tax treatments, may receive different equity instruments, and need to understand how their country of residence affects the value of various compensation structures. This guide covers everything remote workers need to know about evaluating, negotiating, and maximizing equity compensation.

Understanding Equity Types

Before negotiating, you need to understand exactly what you’re being offered. The type of equity instrument affects your tax treatment, exercise requirements, and ultimately, your take-home value.

Incentive Stock Options (ISOs)

ISOs are the most tax-advantaged form of equity compensation—but they’re only available to US employees (not contractors, not international workers).

How ISOs work:

• You receive the right to purchase shares at a fixed “strike price”
• If you hold shares for 1+ year after exercise and 2+ years after grant, gains are taxed as long-term capital gains (currently 15-20%)
• You pay nothing when granted; you pay the strike price when you exercise
• ISOs can trigger Alternative Minimum Tax (AMT) when exercised, even before you sell

ISO limitations:

• Only $100,000 worth of ISO shares can vest in any calendar year (valued at grant-date FMV)
• Excess vesting converts to NSOs
• Must be exercised within 90 days of leaving the company (some companies offer extended windows)
• Only available to W-2 employees, not contractors or international workers

Who gets ISOs: US-based employees at US companies. If you’re a US employee and you’re offered NSOs instead of ISOs, ask why—you may be leaving tax benefits on the table.

Non-Qualified Stock Options (NSOs)

NSOs are the catch-all equity instrument that can be granted to anyone—employees, contractors, advisors, international workers, board members.

How NSOs work:

• Like ISOs, you receive the right to purchase shares at a strike price
• When you exercise, the difference between strike price and current fair market value (the “spread”) is taxed as ordinary income
• Any subsequent appreciation is taxed as capital gains (short or long-term depending on holding period)
• No $100,000 vesting limit
• Exercise window after departure varies by company

Tax comparison example:

Imagine 10,000 options with a $1 strike price, exercised when FMV is $10/share, then sold at $15/share:

	ISOs (qualifying disposition)	NSOs
Exercise cost	$10,000	$10,000
Tax at exercise	$0 (but may trigger AMT)	$90,000 x ordinary income rate (~$31,500 at 35%)
Tax at sale	$140,000 x 20% = $28,000	$50,000 x 20% = $10,000
Total tax	~$28,000	~$41,500
Net proceeds	$122,000	$108,500

The ISO holder keeps roughly $13,500 more—a meaningful difference.

Who gets NSOs: International remote workers, US contractors, advisors, and in some cases US employees (especially when ISO limits are exceeded).

Restricted Stock Units (RSUs)

RSUs are promises to give you actual shares once they vest—no exercise required, no strike price to pay.

How RSUs work:

• You receive a grant of X units that convert to shares upon vesting
• When RSUs vest, their full value is taxed as ordinary income
• The company typically withholds shares to cover tax obligations (often 40-50% of vesting shares)
• Subsequent appreciation is taxed as capital gains when sold

RSU characteristics:

• Simpler than options—no exercise decisions, no strike price considerations
• Less upside than options in high-growth scenarios (because you “pay” at grant-date valuation through taxation)
• Lower risk than options—they’re always worth something if the stock has value
• Common at public companies and late-stage startups

Example RSU scenario:

You receive 1,000 RSUs at a company with $100/share stock price. Over 4 years:

• Total grant value: $100,000
• Each year, 250 RSUs vest
• If stock is $120 at first vesting: $30,000 income, roughly $10,500 withheld for taxes
• You receive about 162 shares (assuming 45% total withholding) worth $19,500

Who gets RSUs: Primarily employees at public companies or well-funded late-stage startups. Less common at early-stage companies where option grants are preferred.

Phantom Stock and Stock Appreciation Rights (SARs)

When actual equity distribution is complicated—often due to international tax issues or corporate structure—companies may offer equity alternatives that mimic stock value without granting actual ownership.

Phantom stock:

• Simulates ownership of real shares
• Pays out cash equivalent to share value (or appreciation) at defined trigger events
• Common triggers: acquisition, IPO, or specific time-based milestones
• Taxed as ordinary income when paid out
• No actual share ownership—you’re a cash claimant, not a shareholder

Stock Appreciation Rights (SARs):

• Grant the right to receive cash equal to the appreciation in stock value
• Similar to options, but settled in cash rather than shares
• You receive: (Current FMV - Grant-date price) x Number of SARs
• Taxed as ordinary income when exercised

Why companies use phantom equity:

• Simplifies international tax compliance
• Avoids complex stock administration across jurisdictions
• Works for corporate structures that can’t easily issue equity to non-US persons
• Common in multinational companies with distributed workforces

Who gets phantom equity: International employees at US companies, workers at companies with complex corporate structures, or in situations where real equity grants are administratively prohibitive.

International Remote Worker Considerations

If you’re not a US-based employee of a US company, equity compensation gets considerably more complex. Understanding these nuances is essential for evaluating what an offer is actually worth.

Why International Workers Usually Get NSOs

ISOs are a creature of US tax law. They only exist because the US tax code provides preferential treatment for options that meet specific criteria—one of which is that the recipient must be a US employee.

International remote workers virtually always receive NSOs (or phantom equity alternatives). This means:

• No ISO tax benefits, even if your country has favorable capital gains treatment
• Taxation follows your country’s rules for stock compensation
• You may owe taxes in multiple jurisdictions depending on where you were when options were granted vs. exercised

Tax Treatment Varies Dramatically by Country

Every country handles equity compensation differently. Some examples:

United Kingdom:

• Options can be tax-advantaged under EMI (Enterprise Management Incentive) scheme for qualifying companies
• Without EMI, gains taxed at grant, exercise, or sale depending on option type
• National Insurance contributions may apply

Germany:

• Stock options generally taxed as income when exercised
• Capital gains tax applies to subsequent appreciation
• Complex rules around timing and valuation

Canada:

• 50% of stock option benefits can be excluded from income in some cases
• Timing of taxation depends on whether shares are publicly traded
• Provincial taxes add complexity

Australia:

• Complex “ESS” (Employee Share Scheme) rules
• Tax can be deferred to when shares are sold or after 15 years
• Startups may qualify for tax concessions

Netherlands:

• Options taxed at exercise as employment income
• 30% ruling for expats can provide tax advantages

General guidance: Always consult a tax professional in your country of residence before accepting or exercising equity. Cross-border tax situations are particularly complex and getting it wrong can result in double taxation or unexpected tax bills.

Double Taxation Risk

When you work remotely for a US company from another country, you potentially face taxation in both jurisdictions. Key scenarios:

US tax obligations:

• If your equity relates to work performed in the US, you may owe US tax on that portion
• FDAP (Fixed, Determinable, Annual, Periodical) income rules can apply
• Tax treaties may reduce or eliminate US tax obligations

Home country obligations:

• Most countries tax their residents on worldwide income
• Your equity compensation is generally taxable where you reside
• Foreign tax credits may offset double taxation, but not always completely

Time allocation issues:

• If you were in the US for part of the vesting period, that portion may be US-taxable
• Some countries allocate equity income based on where you worked during the grant-to-vest period
• Record keeping becomes critical

Currency Considerations

Your equity is likely denominated in USD, but your expenses and taxes are in your local currency.

Currency risk factors:

• Exchange rate fluctuations can significantly impact real value
• A strengthening dollar increases your equity value in local terms
• A weakening dollar erodes value even if the stock price rises
• Tax calculations may use specific exchange rates that differ from market rates

Practical implications:

• Consider currency trends when evaluating equity-heavy packages
• Cash compensation in local currency may be more stable
• Some workers negotiate for a mix of USD and local currency compensation

Evaluating Equity Offers

Now that you understand the types of equity, let’s examine how to evaluate what an offer is actually worth.

Strike Price vs. Fair Market Value

For stock options, the relationship between strike price and current fair market value (FMV) determines your immediate paper value and tax treatment.

Key concepts:

Strike price: The price you pay per share to exercise your options. Set at grant time, typically at the current 409A valuation.

Fair market value (FMV): The current appraised value of the stock. For public companies, this is the market price. For private companies, it’s determined by 409A valuations.

The spread: FMV minus strike price. This is your paper profit per share (before taxes).

409A valuation: An independent appraisal of private company stock value, required at least annually and after material events. Named after Section 409A of the Internal Revenue Code.

Evaluating the strike price:

When you receive an option grant, the strike price is typically the current 409A valuation. However:

• Compare the 409A to the preferred share price from the last funding round
• 409A valuations are typically 30-50% lower than preferred share prices (this is normal)
• If the 409A seems unusually high relative to company stage, ask why
• A high strike price reduces your potential upside

Example analysis:

Company just raised Series B at $10/share preferred price. Your options have a $4 strike price (409A valuation).

If company eventually IPOs at $50/share:

• Your gross profit: $46/share ($50 - $4)
• If strike price had been $7: $43/share
• The $3 strike price difference = $3/share of additional value

Vesting Schedules

Vesting determines when you actually earn your equity. The standard schedule is 4 years with a 1-year cliff:

Standard 4-year, 1-year cliff:

• Month 1-11: 0% vested (cliff period)
• Month 12: 25% vests all at once (cliff vesting)
• Month 13-48: Remaining 75% vests monthly or quarterly (typically 2.08%/month)

Variations to negotiate:

Shorter vesting period: Some companies offer 3-year vesting, giving you the same equity faster.

Accelerated vesting schedules:

• Front-loaded: 40% year 1, 30% year 2, 20% year 3, 10% year 4
• Quarterly cliff: Some equity vests each quarter rather than monthly
• No cliff: Vesting starts immediately (rare, typically for senior hires)

Acceleration provisions:

Single-trigger acceleration: Your equity accelerates upon a defined event (like acquisition).

Double-trigger acceleration: Your equity accelerates only if an event occurs AND you’re terminated. More common and more employer-friendly.

What to look for:

• Ensure acceleration provisions are in your equity agreement, not just company policy
• Ask about historical treatment of equity in prior acquisitions
• Understand the specific mechanics—partial vs. full acceleration

Total Shares Outstanding (Your Actual Percentage)

Share count means nothing without context. 10,000 shares of a 10 million share company (0.1%) is very different from 10,000 shares of a 100 million share company (0.01%).

Questions to ask:

1. Total shares outstanding (fully diluted)? This includes all issued shares, option pools, and convertible instruments.

2. What percentage does my grant represent? Calculate: (Your shares / Fully diluted shares) x 100

3. What’s the current option pool? And is there an expected pool refresh before the next round?

4. How much dilution is expected? Each funding round dilutes existing shareholders by 15-25%

Dilution example:

You’re granted 0.1% of the company at Series A. Before IPO:

• Series B dilutes everyone 20%: You now own 0.08%
• Series C dilutes everyone 20%: You now own 0.064%
• Pre-IPO round dilutes everyone 15%: You now own 0.054%

Your 0.1% became 0.054%—nearly half of what you started with. This is normal. What matters is whether the company valuation grows faster than dilution erodes your percentage.

The 409A Valuation Deep Dive

The 409A valuation is critical for option holders because it determines your strike price and, consequently, your potential profit.

What affects 409A valuations:

• Company revenue and growth trajectory
• Recent funding round valuations
• Comparable company valuations
• Company stage and risk factors
• Time since last funding round

Red flags in 409A valuations:

• 409A close to or exceeding preferred share price (unusual and reduces your upside)
• Significant increase since last valuation without clear business progress
• Company unwilling to share 409A details with candidates

What to ask:

• “What’s the current 409A valuation?”
• “When was the last 409A assessment?”
• “How does the 409A compare to the preferred share price from the last round?”
• “Is there anything that might trigger a 409A refresh before my grant?”

Timing consideration: If the company is about to close a funding round or hit major milestones, the 409A may increase soon. Getting your grant before a 409A refresh locks in a lower strike price.

Calculating Realistic Value

Here’s a framework for estimating what your equity might actually be worth:

Step 1: Calculate paper value

(Number of options) x (Current FMV - Strike price) = Paper value

Example: 20,000 options, $1 strike, $5 FMV Paper value: 20,000 x ($5 - $1) = $80,000

Step 2: Apply risk discount

Not all companies succeed. Apply discounts based on company stage:

Company Stage	Suggested Discount	Paper Value	Discounted Value
Seed/Pre-revenue	80-90%	$80,000	$8,000 - $16,000
Series A	70-80%	$80,000	$16,000 - $24,000
Series B	60-70%	$80,000	$24,000 - $32,000
Series C+	50-60%	$80,000	$32,000 - $40,000
Late-stage/Pre-IPO	30-50%	$80,000	$40,000 - $56,000
Public company RSUs	0-10%	$80,000	$72,000 - $80,000

Step 3: Account for vesting

Remember that you only earn equity as it vests. If you leave after 2 years with standard 4-year vesting, you’ve earned 50% of your grant.

Step 4: Consider tax impact

NSO holders will owe ordinary income tax on the spread at exercise. For high earners, this can be 40%+ of the spread value. Factor this into your calculations.

Step 5: Account for exercise costs

If you have options, you’ll need cash to exercise them. 20,000 options at $1 = $20,000 cash required. Do you have it? What’s the opportunity cost of that capital?

Negotiation Tactics Specific to Equity

Equity negotiation follows different rules than salary negotiation. Here’s how to approach it effectively.

When to Negotiate Equity vs. Salary

Prioritize salary when:

• You need cash flow stability
• The company is very early stage (high equity risk)
• You’re skeptical about the company’s prospects
• You have short-term financial obligations

Prioritize equity when:

• Base salary is competitive and meets your needs
• The company has strong fundamentals and growth trajectory
• You believe in the mission and plan to stay long-term
• Tax treatment of equity is favorable in your jurisdiction

Best approach: Negotiate both as a package. Frame it as: “I’m evaluating total compensation and looking for the right mix of cash and equity.”

The Percentage Conversation

The most powerful equity negotiation tactic is shifting from share count to ownership percentage.

Instead of:

“Can you increase my grant from 10,000 to 15,000 shares?”

Say:

“The current grant of 10,000 shares represents approximately 0.05% of the company. Based on my research, senior engineers at Series A companies typically receive 0.1-0.15%. Would there be flexibility to increase my grant to align with that market range?”

Why this works:

• It shows you understand how equity actually works
• It positions your ask against market benchmarks
• It moves the conversation from arbitrary numbers to meaningful ownership
• It demonstrates you’re thinking long-term about your stake

Benchmarking Equity by Company Stage and Role

Having market data makes your negotiation more credible. Typical ranges (as percentage of company):

Early Stage (Seed - Series A):

• Founding engineers (#1-5): 0.5% - 2%
• Early engineers (#6-20): 0.2% - 0.5%
• Senior engineers (#20-50): 0.1% - 0.25%
• Directors/Leads: 0.25% - 0.5%
• VP-level: 0.5% - 1%

Growth Stage (Series B - C):

• Senior engineers: 0.05% - 0.15%
• Staff/Principal: 0.1% - 0.25%
• Directors: 0.15% - 0.3%
• VP-level: 0.3% - 0.75%

Late Stage (Series D+):

• Senior engineers: 0.01% - 0.05%
• Staff/Principal: 0.03% - 0.1%
• Directors: 0.05% - 0.15%
• VP-level: 0.1% - 0.3%

These ranges vary significantly by company, role, and candidate strength. Use them as starting points, not absolutes.

Negotiating Grant Size

Script for requesting more equity:

“Thank you for including equity in the package—I’m excited about [Company]‘s trajectory and want my stake to reflect my commitment.

The current grant of [X] options represents approximately [Y]% of the company. Based on comparable offers I’ve researched for [role] at [stage] companies, I was expecting closer to [Z]%.

Would there be flexibility to increase the option grant? This is my top priority after base salary, and a grant of [specific number] would make the total package very compelling.”

If they push back on the percentage:

“I understand budget constraints. Could we explore a middle ground—perhaps [midpoint number] options with an agreement to revisit equity during my first performance review? I’m confident I’ll demonstrate value quickly.”

Negotiating Vesting Terms

Beyond grant size, vesting terms significantly impact your actual realized value.

Requesting a shorter vesting period:

“The 4-year vesting schedule is standard, but given my seniority and the immediate impact I’ll bring, would [Company] consider 3-year vesting? This would better align my equity with my expected contribution timeline.”

Requesting accelerated cliff:

“I notice the 1-year cliff. For senior roles, some companies offer 6-month cliffs or eliminate the cliff entirely. Would that be possible here? I’m committed to the long-term, but this would provide earlier alignment between my contributions and ownership.”

Requesting acceleration provisions:

“In the event of an acquisition, what happens to unvested equity? I’d like to ensure there’s either single-trigger or double-trigger acceleration. Can this be added to my equity agreement?”

Negotiating Post-Termination Exercise Windows

The standard 90-day post-termination exercise window forces difficult decisions when leaving a company. If your options have significant value and high exercise costs, you might need to come up with tens of thousands of dollars within 90 days or lose everything.

Script for extended exercise window:

“I noticed the standard 90-day post-termination exercise window. Many employee-friendly companies are extending this to 5-10 years, which aligns incentives without creating financial hardship if circumstances change.

Would [Company] consider a 10-year exercise window for my options? This is particularly important given the potential exercise costs and my commitment to long-term ownership.”

Why companies should agree:

• Doesn’t cost the company anything
• Attracts talent who are wary of the 90-day trap
• Demonstrates employee-friendly values
• Becoming increasingly standard at competitive companies

Negotiating Strike Price Timing

If the company is about to raise a funding round or hit milestones that would trigger a 409A refresh, the timing of your grant matters significantly.

Script for locking in strike price:

“I understand there’s a funding round in progress / upcoming milestone. Would it be possible to issue my equity grant before the 409A valuation is updated? This would lock in the current strike price and provide meaningful upside as the company grows.”

This is a reasonable ask and many companies accommodate it if you join just before a valuation event.

Tax Implications by Equity Structure

Understanding tax implications helps you negotiate smarter and make better exercise decisions.

ISOs: Tax-Advantaged but Tricky (US Employees Only)

Tax events for ISOs:

1. At grant: No tax
2. At exercise: No regular income tax, but the spread may trigger AMT
3. At sale (qualifying disposition): Long-term capital gains on entire profit

Qualifying disposition requirements:

• Hold shares for 1+ year after exercise
• Hold shares for 2+ years after grant date

AMT risk: When you exercise ISOs, the spread (FMV - strike price) is a “preference item” for Alternative Minimum Tax purposes. This can create a tax bill even though you haven’t sold anything.

Example:

• Exercise 10,000 ISOs at $1 strike when FMV is $10
• Spread: $90,000
• This $90,000 is added to AMT income
• Potential AMT liability: $25,000+ depending on your situation
• But you have no cash—just illiquid stock

Strategies:

• Exercise early when spread is small (less AMT exposure)
• Exercise in batches across multiple tax years
• Model AMT implications before exercising
• Consult a tax professional for exercise planning

NSOs: Simpler but Less Tax-Advantaged

Tax events for NSOs:

1. At grant: No tax (assuming strike price equals FMV)
2. At exercise: The spread is taxed as ordinary income (plus payroll taxes)
3. At sale: Any appreciation above exercise-date FMV is capital gains

Tax calculation example:

• Exercise 10,000 NSOs at $1 strike when FMV is $10
• Spread: $90,000 = ordinary income
• Tax at 35% marginal rate: $31,500 (plus ~$2,700 in Medicare tax)
• You owe ~$34,000 but haven’t sold any shares

Key consideration: Unlike ISOs, NSO exercise creates an immediate, unavoidable tax bill. You’ll need cash or to do a same-day sale to cover taxes.

RSUs: Taxed at Vesting

Tax events for RSUs:

1. At grant: No tax
2. At vesting: Full value taxed as ordinary income
3. At sale: Any appreciation above vesting-date value is capital gains

Withholding: Companies typically withhold shares at vesting to cover tax obligations. Common withholding rates: 22% federal + state taxes + Medicare = often 40-50% total.

Example:

• 1,000 RSUs vest at $100/share = $100,000 income
• Company withholds ~450 shares for taxes
• You receive ~550 shares worth $55,000

International Tax Complexity

For international remote workers, equity taxation follows your country of residence, not where the company is located.

Common international tax traps:

Grant-date taxation: Some countries (parts of Germany, for example) tax options at grant, creating a tax liability on paper value you can’t yet realize.

Exercise-date vs. sale-date: Different countries tax equity at different points, which affects your cash flow planning.

Social contributions: Some countries apply social security contributions to equity income, adding 15-25% to your effective tax rate.

Currency conversion: Tax authorities may require specific exchange rates that don’t match your actual conversion.

Recommendations for international workers:

• Get tax advice before accepting equity compensation
• Model the after-tax value in your local currency
• Understand when tax events occur in your jurisdiction
• Set aside appropriate reserves for tax obligations

Red Flags to Watch For

Not all equity offers are created equal. Watch for these warning signs:

Equity Red Flags

No clear percentage disclosed: If the company won’t tell you total shares outstanding, you can’t calculate your percentage. This is a red flag.

Strike price close to preferred share price: The 409A should typically be 30-50% below the last round’s preferred price. If they’re close, your upside is reduced.

Non-standard vesting with extended cliff: 2-year cliffs or 5-year vesting without justification suggest retention tactics over fair compensation.

No post-termination exercise window: If the window is 90 days with no flexibility for negotiation, you might face impossible choices when leaving.

Lack of acceleration provisions: In an acquisition, you could lose unvested equity while founders and executives get full payouts.

Excessive option pool dilution coming: If a large pool refresh is planned before the next round, your percentage will drop significantly.

Murky exit timeline: No path to liquidity (IPO, acquisition, or secondary sales) means your equity may stay theoretical indefinitely.

Company Red Flags

High burn rate relative to runway: A company burning cash quickly with limited runway may not survive long enough for your equity to vest.

Down rounds or rescue financing: If the company raised at a lower valuation than previous rounds, early equity holders often get crushed.

Frequent 409A increases without clear progress: Rising strike prices without corresponding business growth suggests valuation games.

Key executives leaving: Departures of co-founders or critical executives often signal trouble.

Unusual cap table provisions: Excessive liquidation preferences for investors can mean common shareholders (employees) get nothing in most exit scenarios.

Offer Red Flags

Equity-heavy, salary-light packages: If a company is substituting equity for market-rate salary, they’re shifting risk onto you.

Pressure to accept quickly: Legitimate companies give you time to evaluate and consult advisors.

Unwillingness to share details: Companies that won’t answer reasonable questions about equity mechanics are hiding something.

Verbal promises not in writing: “We’ll refresh your grant after a year” means nothing unless it’s in your offer letter.

Essential Questions to Ask About Equity

Before accepting any offer with equity, get answers to these questions:

Equity Negotiation Checklist

Before you start negotiating:

Key Takeaways

Equity compensation is real money—treat it with the same rigor you’d apply to salary negotiation. For remote workers, especially those outside the US, the landscape is more complex but the principles remain:

1. Understand what you’re getting. Know whether you’re receiving ISOs, NSOs, RSUs, or phantom equity. Each has different tax treatment and value characteristics.

2. Calculate ownership percentage, not share count. 10,000 shares means nothing without knowing total shares outstanding. Always think in percentages.

3. Apply realistic risk discounts. Most startup equity ends up worthless. Discount for risk based on company stage and use conservative estimates in your decision-making.

4. Negotiate the full package. Grant size, vesting schedule, cliff period, acceleration provisions, and post-termination exercise window are all negotiable.

5. Get international tax advice. If you’re not a US-based employee, equity taxation in your jurisdiction may differ dramatically from US assumptions.

6. Get everything in writing. Verbal promises about equity refreshes, acceleration, or extended exercise windows mean nothing unless documented.

7. Understand the path to liquidity. Private company equity has no value until there’s an exit. Know the company’s timeline and probability of IPO or acquisition.

8. Don’t dismiss equity, but don’t overvalue it either. The right approach is to evaluate it seriously with appropriate risk adjustment, not to ignore it or treat it as guaranteed money.

Equity negotiation is where many candidates leave significant value on the table. By understanding the mechanics, asking the right questions, and negotiating strategically, you can ensure your equity compensation reflects your true value—regardless of where you work from.