Remote Job Equity: How to Evaluate Stock Options and RSUs by Company Stage

Equity compensation can represent 20-50% or more of total compensation at startups and tech companies, yet most remote workers dramatically underestimate its complexity and either dismiss it entirely or overvalue paper gains. Neither approach serves you well. Equity is real compensation that requires serious evaluation—but it’s fundamentally different from salary because its value is uncertain, illiquid, and heavily dependent on company trajectory and stage.

For remote workers, especially those outside the US, equity evaluation carries additional layers of complexity. International tax implications, different equity instruments, exercise timing decisions, and currency risks all affect your realized value. This guide provides a systematic framework for evaluating equity offers, understanding different equity types, calculating expected value, and asking the right questions before accepting.

Why Equity Evaluation is Different from Salary

Salary is certain, liquid, and predictable. You know exactly what you’ll receive each month, and you can spend it immediately. Equity is none of these things.

Uncertainty: Equity value depends entirely on company performance. In the best case, your equity becomes worth far more than your total salary. In the worst case—and this is the most common outcome for startups—it becomes worth exactly zero. Roughly 90% of startup equity ends up worthless because most startups fail before reaching a liquidity event.

Illiquidity: Unlike salary that hits your bank account every two weeks, equity can’t be converted to cash until a liquidity event—an IPO, acquisition, or secondary sale. This timeline varies dramatically: public company RSUs can be sold immediately, late-stage startup options might reach liquidity in 1-3 years, and early-stage equity might take 5-10 years or never achieve liquidity at all.

Exercise costs and tax complexity: Unlike salary which is taxed straightforwardly, equity creates multiple tax events depending on the type. Options require you to pay cash to exercise them before you can sell, creating a scenario where you might owe tens of thousands of dollars (and face immediate tax obligations) for shares you can’t yet sell. This “pay now for potential value later” dynamic is unique to equity compensation.

Dilution: Your equity percentage decreases over time as companies raise additional funding rounds. Each round dilutes existing shareholders by 15-25%. The company you own 0.1% of today might require you to accept 0.05% by the time it goes public—even as the company becomes far more valuable.

Remote-specific complexity: For international remote workers, equity involves cross-border taxation, different equity instruments (almost always NSOs instead of ISOs), potential double taxation, currency risk, and exercise decisions complicated by foreign tax obligations. What works for a US employee might be catastrophic for an international worker under their local tax regime.

These fundamental differences mean you can’t evaluate equity the same way you evaluate salary. You need to understand the specific instrument you’re receiving, calculate realistic expected value with appropriate risk discounts, model tax implications in your jurisdiction, and factor in your personal financial situation and risk tolerance.

Types of Equity Compensation

Before evaluating an offer, you must understand exactly what you’re receiving. The type of equity dramatically affects taxation, exercise requirements, and ultimate value.

Incentive Stock Options (ISOs)

ISOs are the gold standard of equity compensation from a tax perspective—but they’re only available to US W-2 employees, not contractors or international workers.

How ISOs work:

You receive the right to purchase company shares at a fixed “strike price” (the 409A valuation at grant date). You pay nothing when options are granted. When you exercise, you pay the strike price multiplied by the number of shares. If you hold the shares for at least one year after exercise AND two years after the grant date, all gains are taxed as long-term capital gains (15-20% for most people) instead of ordinary income (potentially 35%+).

Tax advantages example:

You receive 10,000 ISOs with a $1 strike price. Years later, you exercise when FMV is $10/share (paying $10,000), then sell when shares hit $20:

• Exercise cost: $10,000
• Tax at exercise: $0 regular income tax (but may trigger AMT on $90,000 spread)
• Shares sold at $20: $200,000 gross proceeds
• Tax at sale (qualifying disposition): ($200,000 - $10,000) × 20% = $38,000
• Net proceeds: $200,000 - $10,000 - $38,000 = $152,000

ISO limitations:

• $100,000 annual vesting limit: Only $100,000 worth of ISOs (valued at grant-date FMV) can vest per year. Excess automatically converts to NSOs.
• Post-termination window: Standard 90-day exercise window after leaving (some companies offer extended windows—negotiate for this).
• Alternative Minimum Tax (AMT): The spread between strike price and FMV at exercise is an AMT “preference item.” Exercising large ISO grants can trigger substantial AMT liability even though you haven’t sold anything yet.
• US employees only: You must be a W-2 employee of a US company. Contractors and international workers receive NSOs instead.

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

Non-Qualified Stock Options (NSOs)

NSOs work similarly to ISOs mechanically—you receive the right to purchase shares at a strike price—but lack the favorable tax treatment and can be granted to anyone.

How NSOs work:

Like ISOs, you pay nothing at grant. When you exercise, you pay the strike price per share. However, the “spread” (FMV minus strike price) is immediately taxed as ordinary income when you exercise, regardless of whether you sell. Any subsequent appreciation is taxed as capital gains (short or long-term based on holding period).

Tax implications example:

Same scenario as above—10,000 NSOs with $1 strike, exercise at $10 FMV, sell at $20:

• Exercise cost: $10,000
• Tax at exercise: ($10 - $1) × 10,000 = $90,000 ordinary income
• Tax rate at 35%: $31,500
• Medicare tax (2.35% over threshold): ~$2,115
• Total tax at exercise: ~$33,615
• Tax at sale: ($20 - $10) × 10,000 × 20% = $20,000 long-term cap gains
• Net proceeds: $200,000 - $10,000 - $33,615 - $20,000 = $136,385

The ISO holder in the example above nets roughly $15,615 more—a meaningful difference. However, NSOs avoid AMT complications and are simpler to manage.

Critical cash flow consideration:

NSOs create immediate tax liability at exercise. You need cash for both the exercise cost ($10,000 in the example) AND the tax bill ($33,615). That’s $43,615 out-of-pocket before you can sell a single share. If the company is still private with no secondary market, you’re paying taxes on illiquid stock you can’t yet monetize.

Who gets NSOs: International remote workers, US contractors, advisors, board members, and US employees when ISO limits are exceeded.

Restricted Stock Units (RSUs)

RSUs are promises to give you actual shares once they vest—no strike price, no exercise requirement, no cash needed from you.

How RSUs work:

You receive a grant of X units. When units vest (typically quarterly over 4 years), they automatically convert to shares. At the vesting moment, the full market value is taxed as ordinary income. The company typically withholds 40-50% of vesting shares to cover tax withholding, depositing the remainder into your brokerage account.

RSU example:

You receive 1,000 RSUs at a company trading at $100/share:

• Grant value: $100,000 (for reference only—no tax at grant)
• Year 1, Q1: 250 RSUs vest at $120/share = $30,000 income
• Tax withholding at 45%: ~$13,500
• Shares withheld for taxes: ~112 shares
• Shares deposited to your account: 138 shares worth ~$16,500

You now own 138 shares you can sell immediately (if public) or hold for potential appreciation.

RSU characteristics:

• Simpler than options: No exercise decisions, no strike price, no cash required from you.
• Always worth something: If the stock has any value when vesting, you receive value. Options can be underwater (FMV below strike price) and worthless.
• Less upside than options: In high-growth scenarios, options provide more leverage because you lock in a low strike price.
• Tax at vesting: The full FMV at vesting is ordinary income. If the stock price drops after vesting but before you sell, you still owe tax on the higher vesting-date value.
• Common at public and late-stage companies: Less common at early-stage startups where options are preferred for capital efficiency.

Who gets RSUs: Employees at public companies (Google, Meta, Amazon, etc.) and well-funded late-stage private companies. Less common at seed through Series B companies.

Phantom Stock and Stock Appreciation Rights (SARs)

When granting actual equity is complicated—often for international tax reasons or corporate structure constraints—companies use equity alternatives that track stock value without granting ownership.

Phantom stock:

You receive “phantom shares” that track real share value but aren’t actual ownership. At defined trigger events (acquisition, IPO, liquidity event), you receive cash equal to the phantom share value. You’re a creditor with a cash claim, not a shareholder.

Stock Appreciation Rights (SARs):

Similar to options, but settled in cash rather than shares. You receive the appreciation in value: (Current FMV - Grant Price) × Number of SARs, paid as cash.

Example:

1,000 phantom shares or SARs granted at $5/share value. Company acquired at $25/share. You receive $20,000 cash (1,000 × $20 appreciation), taxed as ordinary income.

Why companies use phantom equity:

• Simplifies international tax compliance
• Avoids complex cap table management across jurisdictions
• Works when corporate structure makes real equity grants difficult
• Common at multinational companies with distributed workforces

Trade-offs:

• No actual ownership or voting rights
• Payout depends on company liquidity to fund the cash settlement
• All taxed as ordinary income (no capital gains treatment)
• May not participate in upside the same way real equity does

Who gets phantom equity: International employees at US companies, workers at companies with complex structures, or when real equity distribution is administratively prohibitive.

Vesting Schedules and Cliffs

Vesting determines when you actually earn your equity. Understanding vesting mechanics is critical for evaluating how much equity you’ll realistically receive.

Standard 4-Year Vesting with 1-Year Cliff

The industry-standard vesting schedule works as follows:

Months 1-11 (Cliff period): 0% vested. If you leave before completing one year, you receive nothing. This protects companies from granting equity to employees who leave quickly.

Month 12 (Cliff vesting): 25% vests all at once. If you have 10,000 options, 2,500 vest on your one-year anniversary.

Months 13-48 (Linear vesting): The remaining 75% vests monthly or quarterly. Monthly vesting means 2.08% per month (10,000 options = 208.33 per month).

Example over 4 years:

• Month 0: Grant of 10,000 options, 0 vested
• Month 12: 2,500 vested (25%)
• Month 18: 3,750 vested (6 months × 208.33 = 1,250 additional)
• Month 24: 5,000 vested (50% total)
• Month 36: 7,500 vested (75% total)
• Month 48: 10,000 vested (100% complete)

Alternative Vesting Structures

Some companies offer variations worth negotiating for:

Shorter vesting period (3 years): Same equity, faster vesting. More employee-friendly and valuable if you plan shorter tenure.

Front-loaded vesting: 40% year 1, 30% year 2, 20% year 3, 10% year 4. Common at Amazon for RSUs (“back-loaded” inverse also exists). Front-loading accelerates value realization.

No cliff or shorter cliff: More friendly to employees, reduces risk of leaving just before cliff vesting. More common for senior hires.

Quarterly vesting: 25% vests each year rather than monthly. Simpler administration but creates “vesting gaps” where leaving between quarters costs you months of unvested equity.

Acceleration Provisions

Acceleration clauses cause unvested equity to vest immediately upon defined triggering events, typically acquisitions.

Single-trigger acceleration:

Equity vests upon a single event—usually company acquisition. If you have 50% unvested and the company is acquired, your remaining 50% vests immediately.

Why it matters: Protects you if the acquiring company doesn’t want to keep you or if retention terms are unfavorable.

Why companies resist: Can create perverse incentives where employees push for acquisition just to vest equity.

Double-trigger acceleration:

Requires TWO events: (1) acquisition or change of control AND (2) termination without cause or resignation for good reason within a defined period (often 12-18 months post-acquisition).

Why it matters: More common than single-trigger. Protects you from being terminated immediately post-acquisition and losing unvested equity.

Why companies prefer it: Balances employee protection with retention incentives. Acquiring companies want key employees to stay.

What to ask:

• “What acceleration provisions exist in the equity agreement?”
• “Is it single-trigger or double-trigger?”
• “What percentage of unvested equity accelerates?”
• “What qualifies as ‘good reason’ for resignation to trigger acceleration?”
• “What happened to employee equity in your last acquisition?” (if applicable)

Get acceleration provisions in your written equity agreement, not just company policy. Policies can change; contracts are binding.

Strike Price, 409A Valuations, and Fair Market Value

For option holders, understanding the relationship between strike price and fair market value (FMV) is fundamental to evaluating your equity’s value and tax obligations.

What is a 409A Valuation?

Section 409A of the Internal Revenue Code requires private companies to establish the fair market value of their stock through independent appraisals. This valuation determines the strike price for option grants.

When 409A valuations occur:

• At least annually
• After material events: new funding rounds, major revenue milestones, significant partnerships, M&A discussions

What affects 409A valuations:

• Recent funding round valuations (preferred share prices)
• Revenue, growth rate, and profitability
• Comparable public company valuations
• Company stage and risk profile
• Market conditions

409A vs. Preferred Share Price:

The 409A valuation (for common stock) is typically 30-50% below the preferred share price from the last funding round. This discount exists because:

• Preferred shares have liquidation preferences and other protective rights
• Common stock (what employees get) is subordinate to preferred
• The discount reflects the illiquidity and subordination risk

Example:

Company raises Series B at $10/share for preferred stock. The 409A might value common stock at $4-7/share. Your options will have a strike price in that range.

Evaluating Strike Price

When evaluating an option grant, assess whether the strike price is reasonable:

Red flags:

• 409A close to or exceeding preferred share price (unusual and reduces your upside)
• 409A significantly higher than prior valuation without clear business progress
• Company unwilling to disclose 409A or last funding round details

Questions to ask:

• “What’s the current 409A valuation?”
• “When was the last 409A assessment completed?”
• “What was the preferred share price in the most recent funding round?”
• “Are there any upcoming events that might trigger a 409A refresh?”

Timing consideration:

If the company is about to close a funding round or achieve major milestones, the 409A may increase soon. Getting your grant before a 409A refresh locks in a lower strike price and increases your potential upside.

Calculating Your Spread

The “spread” is your paper profit per share:

Spread = Current FMV - Strike Price

Example:

• Strike price: $2
• Current FMV (latest 409A): $8
• Spread: $6 per share
• 10,000 options: $60,000 paper value

This paper value is what you’d realize if you exercised today and the stock instantly became liquid at the current FMV—neither of which is guaranteed.

Exercising Options: Costs, Timing, and Tax Implications

Exercising options is when you convert your option rights into actual shares by paying the strike price. This creates immediate financial and tax implications.

Exercise Costs

The basic calculation is straightforward:

Exercise Cost = Strike Price × Number of Options

Example:

• 10,000 options at $2 strike = $20,000 exercise cost

You must pay this $20,000 to convert your options to shares. This is cash out-of-pocket before you can sell anything.

Considerations:

• Do you have the cash available?
• What’s the opportunity cost of that capital?
• Can you afford to lose 100% if the company fails?
• Are there same-day sale or cashless exercise options available?

Tax Implications at Exercise

For ISOs (US employees only):

• No regular income tax at exercise
• BUT the spread may trigger Alternative Minimum Tax (AMT)
• AMT calculation: (FMV - Strike Price) × Options Exercised is added to AMT income
• Potential AMT liability even though you have no cash from sale yet

AMT example:

• Exercise 10,000 ISOs at $1 strike when FMV is $10
• Spread: $90,000
• This $90,000 is an AMT preference item
• Depending on your AMT situation, you might owe $25,000+ in AMT
• You paid $10,000 to exercise + $25,000 in AMT = $35,000 total cash outlay for illiquid stock

For NSOs (international workers, contractors, US employees in some cases):

• The spread is taxed as ordinary income immediately at exercise
• You owe income tax on (FMV - Strike Price) × Number of Options
• Plus payroll taxes (Medicare, etc.) on that same spread
• This tax liability exists whether or not you can sell the shares

NSO tax example:

• Exercise 10,000 NSOs at $1 strike when FMV is $10
• Spread: $90,000 ordinary income
• Federal tax at 35%: $31,500
• Medicare tax: ~$2,100
• State tax (if applicable): varies, potentially $5,000-$9,000
• Total tax: $38,600-$42,600
• Total cash needed: $10,000 exercise + $38,600-$42,600 tax = $48,600-$52,600

You need this cash before exercising, and you’re paying it for illiquid stock you can’t yet sell.

Early Exercise and 83(b) Elections

Some companies allow “early exercise”—exercising options before they’ve vested. This enables you to start the capital gains holding period clock and potentially minimize tax liability.

How early exercise works:

You exercise unvested options immediately at grant (when strike price = FMV, so spread is $0). You own shares, but they’re subject to repurchase if you leave before vesting. As they vest, you truly own them with no further tax events.

83(b) election:

Within 30 days of early exercise, you file an 83(b) election with the IRS stating you’re choosing to recognize the taxable event now (when spread is $0) rather than at vesting. This locks in your cost basis at the strike price.

83(b) example:

• Early exercise 10,000 options at $1 strike when FMV is also $1 (at grant)
• Spread at exercise: $0
• File 83(b) election within 30 days
• Cost basis locked in at $1/share
• No tax at exercise (spread is $0)
• Years later, shares are worth $20: all $19 appreciation is capital gains, not ordinary income

Without 83(b):

If you don’t file 83(b), each vesting event is taxed as ordinary income based on the FMV at that vesting date. If shares appreciated significantly, you owe tax on that gain as ordinary income even though you exercised early.

Considerations:

• Only makes sense if strike price is very low (minimizing cash outlay)
• Risk: company fails and you lose 100% of exercise cost
• Must file 83(b) within 30 days or face disastrous tax consequences
• Not available at all companies

Post-Termination Exercise Windows

When you leave a company, you typically have a limited window to exercise vested options or lose them permanently. The standard window is 90 days, which creates difficult decisions.

The 90-day trap:

You leave the company with 10,000 vested options worth $100,000 on paper. Exercise cost is $20,000 plus $28,000 in taxes (NSO). You need $48,000 within 90 days to keep options that are currently illiquid. If you can’t afford it or don’t want the risk, you forfeit $100,000 in paper value.

This forces people to:

• Spend significant savings on illiquid stock
• Take loans to exercise
• Walk away from valuable equity
• Stay at jobs they’d otherwise leave to avoid the decision

Extended exercise windows:

Progressive companies offer 5-10 year post-termination exercise windows. This allows you to wait until liquidity is closer before deciding whether to exercise.

Negotiating extended windows:

This is increasingly common and worth asking for, especially for senior hires:

“I noticed the standard 90-day post-termination exercise window. Many employee-friendly companies now offer 5-10 year windows, which eliminates the forced-choice problem without costing the company anything. Would [Company] consider extending the exercise window in my equity agreement?”

Why companies should agree:

• Doesn’t cost the company anything
• Attracts talent who want to avoid the 90-day trap
• Demonstrates employee-first culture
• Becoming more standard at competitive tech companies

Get extended windows in your written equity agreement before accepting the offer.

Calculating Expected Value by Company Stage

Raw equity numbers are meaningless without context. A grant of 10,000 shares could be worth millions or nothing depending on the company’s trajectory. Here’s how to calculate realistic expected value.

The Expected Value Framework

Expected Value = (Ownership %) × (Future Company Value) × (Probability of Success) - (Exercise Costs + Taxes)

This formula requires estimating several unknowns, but even rough estimates are better than accepting equity blindly.

Step 1: Determine Your Ownership Percentage

Share count alone is meaningless. Always calculate percentage:

Ownership % = (Your Shares / Fully Diluted Shares Outstanding) × 100

What to ask:

• “What’s the total number of fully diluted shares outstanding?”
• “What percentage of the company does my grant represent?”

Fully diluted includes all issued shares, the option pool, convertible notes, and any other instruments that could become equity.

Example:

• Your grant: 10,000 options
• Fully diluted shares: 20,000,000
• Your ownership: 10,000 / 20,000,000 = 0.05%

Step 2: Estimate Future Value and Account for Dilution

Your percentage will decrease in future funding rounds. Each round typically dilutes existing shareholders by 15-25%.

Dilution example:

Starting ownership: 0.1%

• Series B (20% dilution): 0.1% × 0.8 = 0.08%
• Series C (20% dilution): 0.08% × 0.8 = 0.064%
• Series D (15% dilution): 0.064% × 0.85 = 0.054%

Your 0.1% became 0.054% by late-stage—nearly half eroded by dilution.

Future value estimation:

This is speculative but necessary. Research comparable companies:

• What’s a realistic exit valuation for companies in this sector and stage?
• What’s the current valuation and how much growth is likely?
• What’s the timeline to liquidity?

Example:

Company is currently valued at $200M (Series B). Realistic IPO valuation in 4-6 years might be $2B.

Your 0.05% (after dilution) of $2B = $1,000,000 gross value.

Step 3: Apply Risk Discounts

Most startups fail. Your expected value must reflect this reality.

Suggested risk discounts by stage:

Stage	Discount	Reasoning
Seed/Pre-revenue	80-90%	Most fail; product-market fit unproven
Series A	70-80%	Revenue traction but high risk
Series B	60-70%	Established product but growth uncertain
Series C+	50-60%	De-risked but still private
Late-stage/Pre-IPO	30-50%	Path to liquidity clearer
Public company RSUs	0-10%	Liquid; use current market price

Applying the discount:

Gross value: $1,000,000 Series B discount (65%): $1,000,000 × 0.35 = $350,000 risk-adjusted value

This $350,000 is spread over 4 years of vesting = $87,500/year expected value.

Step 4: Subtract Costs

Exercise costs:

10,000 options × $2 strike = $20,000

Estimated tax (NSO holder):

Assume exit at $200/share (the $2B valuation scenario):

• Spread at exercise: ($200 - $2) × 10,000 = $1,980,000
• Ordinary income tax at 35%: $693,000
• Long-term cap gains if held 1+ year after exercise: lower, but requires liquidity timing

These numbers are estimates, but they show the magnitude of costs that reduce net value.

Final expected value:

$350,000 (risk-adjusted value) - $20,000 (exercise) - $200,000 (estimated taxes) = $130,000 net expected value over 4 years.

This is a rough approximation, but it’s far better than blindly assuming the $1,000,000 gross value is what you’ll realize.

Evaluating Equity by Company Stage

Company stage dramatically affects risk, timeline to liquidity, and expected returns. Evaluate equity differently at each stage.

Early-Stage Startups (Seed - Series A)

Characteristics:

• High risk: product-market fit unproven, most will fail
• Long liquidity timeline: 7-10 years or never
• High potential upside: if successful, early equity can be life-changing
• Larger equity grants (as % of company)

Valuation:

Apply 70-90% risk discount. Even companies with promising early traction fail regularly.

What to evaluate:

• Founding team quality and track record
• Market size and growth trajectory
• Product differentiation and early customer traction
• Funding runway and path to next round
• Investor quality (reputable VCs signal higher success probability)

Equity expectations (as % of company):

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

Risk-return profile:

Accept early-stage equity only if:

• Your base salary covers your needs without equity
• You believe in the mission and team
• You can afford the potential total loss
• The upside would be meaningful (enough equity % to matter)

Heavy discount for remote international workers:

Early-stage equity is especially risky for international workers who’ll face complex tax situations and may not be able to participate in secondary sales that help US employees get partial liquidity.

Growth-Stage Companies (Series B - C)

Characteristics:

• Moderate risk: product-market fit established, revenue growing, but profitability and scale uncertain
• Medium liquidity timeline: 3-6 years to exit
• Moderate upside: less explosive growth than early-stage, but clearer path to value
• Smaller equity grants (as %) but more certain value

Valuation:

Apply 50-70% risk discount. These companies have proven product-market fit but still face execution and market risks.

What to evaluate:

• Revenue growth rate and trajectory to profitability
• Customer retention and unit economics
• Competitive positioning and market dynamics
• Management team strength
• Path to next funding or exit

Equity expectations (as % of company):

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

Risk-return profile:

More balanced than early-stage. You’re giving up some upside potential for reduced risk and shorter timeline to liquidity.

Secondary market opportunity:

Growth-stage companies sometimes have secondary sales where employees can sell some vested shares before IPO. Ask about:

• “Has the company facilitated secondary sales for employees?”
• “Are secondary sales allowed per the stock plan?”

This can provide partial liquidity while still maintaining upside exposure.

Late-Stage/Pre-IPO Companies (Series D+)

Characteristics:

• Lower risk: established business model, significant revenue, often approaching profitability
• Shorter liquidity timeline: 1-3 years to IPO or acquisition
• Lower upside: most explosive growth already happened
• Mix of options and RSUs (increasingly RSUs)

Valuation:

Apply 30-50% risk discount. These companies are de-risked but not guaranteed to IPO successfully. Market conditions, competition, and execution still matter.

What to evaluate:

• IPO timeline and readiness
• Valuation trend (up-round or flat/down-round)
• Public market comparables and likely IPO valuation
• Lock-up periods post-IPO
• Employee secondary sale opportunities

Equity expectations (as % of company):

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

Risk-return profile:

More like “deferred cash” than true startup lottery tickets. You have reasonable confidence in eventual liquidity and can estimate value more reliably.

Questions specific to late-stage:

• “What’s the expected IPO timeline?”
• “What’s the current valuation and how does it compare to recent rounds?”
• “What lock-up period will apply post-IPO?”
• “Are tender offers or secondary sales available to employees?”

Public Companies

Characteristics:

• Minimal risk: stock is liquid and can be sold immediately (after vesting)
• Immediate liquidity: no waiting for exit
• Market-based valuation: stock price fluctuates with public markets
• Almost always RSUs, not options

Valuation:

0-10% discount for volatility and vesting risk. Public company RSUs are close to cash—you can sell immediately when they vest.

What to evaluate:

• Current stock price and 52-week trend
• Analyst ratings and price targets
• Company growth trajectory and competitive position
• Vesting schedule and refresh grants

Equity as compensation:

At public companies, RSUs are a significant part of total compensation and should be evaluated as deferred salary. A $200,000 base + $100,000/year in RSUs is effectively $300,000 total compensation.

Annual refreshes:

Public companies often grant annual RSU refreshes to retain employees. Ask about:

• “What’s the typical annual refresh grant?”
• “How are refreshes determined (performance, level, retention)?”

Tax simplicity:

Public company RSUs are simpler for international workers because:

• No exercise decisions (automatic vesting)
• Can sell immediately to cover taxes
• Valuation is clear (market price)

International Remote Worker Equity Considerations

If you’re not a US-based employee, equity compensation introduces significant additional complexity.

Why International Workers Get Different Equity

US tax law constraints:

ISOs are only available to US employees because they’re a creature of US tax law. International workers virtually always receive NSOs or phantom equity.

Administrative complexity:

Issuing equity across jurisdictions involves:

• Compliance with local securities laws
• Tax withholding in multiple countries
• Cap table management across regions
• Currency and foreign exchange considerations

Some companies simplify by using phantom stock or cash-settled instruments for international workers.

Taxation Varies Dramatically by Country

Equity taxation is determined by your country of residence, not where the company is headquartered. Tax treatment varies wildly:

United Kingdom:

• Enterprise Management Incentive (EMI) schemes offer tax advantages for qualifying UK companies
• Without EMI, options typically taxed at exercise
• National Insurance contributions may apply
• Capital gains tax on subsequent appreciation

Germany:

• Options generally taxed as employment income when exercised
• Social security contributions can add 20%+ to effective rate
• Capital gains tax (26.375%) on appreciation after exercise
• Complex rules around timing and valuation

Canada:

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

Australia:

• Employee Share Scheme (ESS) rules determine taxation
• Tax can often be deferred until shares are sold or 15 years after grant
• Startups may qualify for tax concessions ($1,000 exemption)

Netherlands:

• Options taxed at exercise as employment income (Box 1)
• 30% ruling for expats can provide substantial tax advantages
• Wealth tax may apply to share holdings

General rule: Consult a cross-border tax advisor in your country before accepting equity or exercising options. Tax mistakes can result in double taxation or unexpected liabilities.

Double Taxation Risk

Working remotely for a US company from another country creates potential taxation in multiple jurisdictions:

US tax obligations:

• If equity relates to work performed in the US, that portion may be US-taxable
• Tax treaties may reduce or eliminate US obligations
• FDAP income rules can create withholding requirements

Home country obligations:

• Most countries tax 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 complexity:

If you moved countries during the vesting period, some jurisdictions allocate equity income based on where you worked:

• Example: 2 years in US, 2 years in Germany during 4-year vesting
• Some countries would allocate 50% as US-earned, 50% as Germany-earned
• Each portion taxed under respective country’s rules
• Record-keeping becomes critical

Recommendation:

Document your location throughout your employment. If you relocate internationally, consult a tax advisor about equity implications before exercising or selling.

Currency Considerations

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

Currency risk:

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

Example:

Your equity is worth $100,000 USD:

• At 1.2 EUR/USD: €83,333
• USD weakens to 0.9 EUR/USD: €111,111 (33% more)
• USD strengthens to 1.5 EUR/USD: €66,667 (20% less)

Your real value in euros varies significantly even though USD value is constant.

Practical considerations:

• Consider currency trends when evaluating equity-heavy offers
• Cash salary in local currency may be more stable
• Some workers negotiate for currency hedging or mixed compensation

Questions to Ask About Equity Before Accepting

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

Companies should answer these readily. Evasiveness or unwillingness to share details is a red flag.

Red Flags in Equity Offers

Watch for these warning signs when evaluating equity:

Equity structure red flags:

• Company won’t disclose total shares outstanding (you can’t calculate your %)
• Strike price close to or exceeding preferred share price (reduces upside)
• Non-standard vesting with extended cliff (2+ years suggests retention tactics over fair comp)
• Standard 90-day exercise window with no flexibility to negotiate longer
• No acceleration provisions (you lose unvested equity in acquisition while executives get paid)
• Excessive planned option pool dilution before next round (your % drops dramatically)

Company red flags:

• High burn rate with limited runway (may not survive to vesting)
• Down rounds or rescue financing (early equity gets crushed)
• Frequent 409A increases without corresponding business progress (valuation games)
• Key executives or co-founders leaving (signals trouble)
• Unusual cap table provisions (excessive liquidation preferences mean common shareholders get nothing in most exit scenarios)

Offer red flags:

• Equity-heavy, salary-light packages (shifting risk to you)
• Pressure to accept quickly without adequate evaluation time
• Unwillingness to answer reasonable equity questions
• Verbal promises about refreshes or acceleration not in writing
• Lack of clarity on international worker equity treatment

If you see multiple red flags, reconsider whether the equity has real value or is being used to mask inadequate cash compensation.

Equity Evaluation Checklist

Before accepting an offer with equity compensation:

Negotiating Your Equity Grant

If the initial equity offer seems low, negotiate. Most companies have flexibility on equity even when salary is constrained.

Frame equity negotiation around percentage, not share count:

“Thank you for the offer. I’m excited about [Company]‘s trajectory. The current grant of 10,000 options represents approximately 0.05% of the company. Based on my research for [role] at Series [stage] companies, I was expecting closer to 0.1-0.15% for this level. Would there be flexibility to increase the grant to align with market ranges?”

This approach works because:

• Shows you understand how equity actually works (percentages matter, not raw shares)
• Positions your ask against market benchmarks (not arbitrary)
• Demonstrates long-term thinking about ownership
• Moves the conversation from “more shares” to “fair ownership stake”

If they can’t increase grant size, negotiate other terms:

• Extended post-termination exercise window (5-10 years instead of 90 days)
• Shorter vesting period (3 years instead of 4)
• Acceleration provisions if not already included
• Earlier review for equity refresh
• Ability to early exercise with 83(b) election

For international workers, negotiate tax support:

“Given the complexity of equity taxation in [country], would [Company] provide access to cross-border tax advisors or cover the cost of professional tax advice?”

Many companies have relationships with global tax advisors and can facilitate this at low cost.

Key Takeaways

Equity compensation is real value—but only if you evaluate it properly:

1. Understand what you’re receiving: ISOs, NSOs, RSUs, and phantom stock all work differently and have different tax implications. Know which you’re getting and why.

2. Always think in percentages: Share count is meaningless. Calculate your ownership percentage and understand how dilution will erode it over time.

3. Apply realistic risk discounts: Most startup equity becomes worthless. Discount heavily for early-stage risk (70-90%), moderately for growth-stage (50-70%), and conservatively for late-stage (30-50%).

4. Account for all costs: Exercise costs, tax obligations at exercise, and tax at sale all reduce your net value substantially. Model these carefully.

5. International workers face extra complexity: Different equity types, complex taxation in your home country, potential double taxation, and currency risk all affect your realized value. Get professional tax advice.

6. Negotiate the full equity package: Grant size, vesting terms, exercise window, and acceleration provisions are all negotiable. Don’t leave value on the table.

7. Get everything in writing: Verbal promises about refreshes, acceleration, or special terms mean nothing. Ensure all agreements are in your written equity grant.

8. Equity is upside, not salary replacement: Ensure your base compensation covers your needs without equity. Treat equity as potential upside, not guaranteed income.

9. Evaluate by company stage: Early-stage equity is high-risk/high-reward; late-stage is lower-risk/lower-reward. Adjust your evaluation framework accordingly.

10. Ask all the questions: Companies should readily answer questions about total shares, 409A valuations, acceleration provisions, and tax implications. Evasiveness is a red flag.

Equity evaluation is where many remote workers—especially international workers—leave significant value on the table or accept equity they don’t understand. By systematically evaluating the type, calculating realistic expected value, understanding tax implications in your jurisdiction, and negotiating effectively, you ensure your equity compensation reflects your true value and serves your financial goals.

Additional Resources

For more guidance on equity and remote compensation:

• Our equity negotiation guide covers negotiation tactics and scripts
• Learn overall remote salary expectations across roles and experience levels
• Use our salary comparison tool to evaluate total compensation packages
• Understand the full picture with our remote job offer evaluation framework

Equity compensation can represent life-changing wealth or nothing at all. The difference between those outcomes depends partly on company success—but also significantly on whether you evaluate and negotiate your equity thoughtfully. Take the time to understand what you’re receiving, calculate realistic expected value, and ask the right questions. Your future self will thank you.