Free tools Windows power users keep installed
One-click scans. No signup required.
There is no universal percentage of a startup that is right for a key employee. Size the grant against the company’s hiring plan and available equity pool, then weigh the person’s role, seniority, start date, company stage, hiring risk, and cash compensation. Give the employee a precise account of the award—its instrument, share or option count, vesting, and the basis for any quoted ownership percentage—rather than implying that a percentage guarantees future cash.
Start with the hiring plan, not a percentage
An employee option pool is a company-wide resource for current and planned hiring; it is not an individual employee’s recommended grant. Carta’s current option-pool guide says to size the pool around the actual hiring plan, including expected hiring over roughly the next 12–18 months, and describes 10% to 15% as common, with 10% most frequent. Those figures are company guidance, not a legal standard or an allowance for one hire. Carta’s option-pool guide
A 2022 Carta article reported a different broad benchmark: companies typically reserved 13% to 20% for the employee option pool. That older range and the current guide should be treated as dated context from one source, not combined into a universal rule. Pool needs depend on the company’s planned hires and circumstances. Carta’s March 2022 early-employee article
Map the pool to expected hires
- List expected hires over the company’s planning horizon and estimate grants by role, seniority, industry, and stage.
- Compare the total planned grants with the available pool and likely future hiring needs before deciding what remains available for this employee.
- Model anticipated hiring and financing dilution rather than treating today’s ownership percentage as permanent.
Cap-table and equity-management software can help companies track the pool, grants, and capitalization; it does not determine what a particular employee should receive.
#1 Best Overall
Calibrate the grant to the job and the offer
Define the role’s scope, seniority, scarcity, expected impact, and the risk the person accepts by joining at the company’s current stage. A key hire with broad responsibility or a particularly difficult-to-fill skill may merit different treatment from a narrower role. Match compensation data to the role, company stage, geography, and hiring date when possible; a general benchmark is a poor substitute for a relevant comparison.
Assess cash and equity together. Carta’s 2022 article notes that a larger gap between the salary the company can offer and market pay may make additional equity worth considering. That tradeoff does not convert into a fixed percentage: the appropriate offer still depends on the role, the company’s capacity, and the economics of the award. The article quotes Zeta Global founder David Steinberg asking, “What’s the cash consideration an employee is giving up to work with you?” Carta, March 2022
Compare grant structures on the same basis
If you are weighing multiple offers or award structures, compare the underlying terms rather than looking at a percentage alone.
- Ownership basis: Record the number of shares or options and the fully diluted share count used to calculate any percentage. Say whether it is measured before or after the grant.
- Cash tradeoff: Compare salary and other compensation with market pay for the role.
- Timing and risk: Consider when the employee joins, the company’s stage, the scope of the role, and the contribution expected.
- Instrument economics: Compare options, restricted stock, or another award using the actual strike price, vesting, exercise cost, and applicable tax treatment.
- Future dilution and pool capacity: Account for expected hiring, financing needs, and any planned future grants or refreshers.
- Employee circumstances: Consider tax residence, liquidity needs, and ability to fund exercise costs or taxes.
Make the award understandable and verifiable
A quoted ownership percentage is meaningful only with a denominator and capitalization basis. Explain the number of shares or options, the total shares used in the calculation, and whether the figure is before or after the grant. Future financing, additional grants, and other changes in capitalization can dilute an employee’s ownership; do not present the percentage as fixed or as a promised future cash value.
Do these 3 things before closing this tab:
1Fix the driver behind crashes, sound loss and screen glitches2Repair Windows errors before they cause bigger problems3Scan for outdated or missing drivers - takes under a minuteDescribe the instrument and terms from the approved grant documents. Before presenting an offer, confirm the award’s approval, vesting schedule, strike price where applicable, exercise rules, post-termination treatment, and any other governing terms. Do not infer these terms from a headline percentage or a general market convention.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Account for tax and jurisdiction
Tax consequences depend on the instrument, the grant’s facts, eligibility, and the employee’s jurisdiction. For U.S. federal tax, the IRS says that income on exercise of nonstatutory options is generally based on the spread between fair market value and the exercise price; discounted options may raise Section 409A issues. The IRS also explains that a company’s 409A valuation or fair market value determines an option’s strike price. These points do not establish the right treatment for every award or employee. IRS transcript on U.S. taxation of stock-based compensation
IRS Publication 525 (2025) describes a possible income-tax deferral of up to five years for eligible employees receiving qualifying stock through certain broad-based private-company programs. Eligibility and plan requirements apply, so this is not a general tax feature of employee equity. IRS Publication 525 (2025) The cited IRS material is U.S.-specific; other jurisdictions may apply materially different rules. Have counsel and a tax adviser review the actual award and the employee’s tax situation.
Quick Recap
Best Value
A practical sequence for setting the grant
- Forecast hiring: List planned hires and reserve pool capacity against the company’s actual needs over its planning horizon.
- Define the role: Document scope, seniority, scarcity, expected contribution, and the risk associated with joining at this stage.
- Set the cash context: Compare the proposed salary with relevant market compensation and consider whether a meaningful shortfall changes the equity offer.
- Model ownership: Calculate the grant against fully diluted capitalization and the remaining pool, including plausible hiring and financing needs. State the denominator and whether the percentage is before or after the award.
- Verify the terms: Check the instrument, approval, vesting, strike price and exercise terms where applicable, post-termination treatment, and relevant tax rules with qualified advisers.
- Explain the offer plainly: Provide the share or option count, any percentage and its basis, vesting, applicable strike price and exercise rules, and the uncertainty around liquidity and dilution. Confirm that each term matches the approved documents.
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
