What should I negotiate in an executive equity package?

Negotiate acceleration on a change of control, the post-termination exercise window, and what happens to unvested equity if you are terminated without cause. Those three move more money than the number of shares. Ask for the full cap table on a fully diluted basis including the option pool and any preference stack, because a percentage means nothing without the denominator and the waterfall above you.

Most people negotiate the share count and sign everything else. The share count is the least important number in the package.

Get the denominator before you get excited

One percent of what. Ask for the fully diluted capitalization including the unallocated option pool, all convertible instruments, and the liquidation preference stack sitting above the common. A company with $60 million of participating preferred over your common can sell for $70 million and pay you almost nothing. That is not a trick; it is the deal the investors negotiated. You just have to know it exists before you value your grant.

Acceleration

Single trigger accelerates vesting on a change of control. Double trigger accelerates on a change of control plus your termination without cause or resignation for good reason within a defined window. Double trigger is the market standard for executives and is what you should ask for by name. Without it, the acquirer can close the deal, terminate you in month two, and keep your unvested equity.

Get the definitions of cause and good reason in writing, and make good reason include a material reduction in duties, a comp cut, and a relocation. Otherwise the acquirer moves your job to another state, you quit, and nothing triggers.

The post-termination exercise window

The default is ninety days. That means when you leave, you have ninety days to write a check for the exercise price plus, in the case of non-qualified options, the tax on the spread, for stock in a private company you cannot sell. People walk away from years of vested equity because they cannot fund the exercise.

Ask for an extended window, seven to ten years from grant, which more companies allow than used to. If the answer is no, that changes how you should value the entire offer.

Early exercise and the 83(b) election

If the plan permits early exercise of unvested options, exercising at grant while the spread is zero and filing an 83(b) election within thirty days starts your capital gains holding period immediately. The thirty days is absolute and there is no relief for missing it. This is worth real money on a grant that appreciates, and it is worth nothing if the company has already grown and the spread is large.

Everything else that gets skipped

Whether there is a company repurchase right on vested shares after you leave, and at what price. Whether you sign a drag-along that commits you to a sale on terms decided by others. Whether you have information rights. Whether the grant is documented at all, because a promise in an offer letter with no board approval and no grant agreement is not equity.

Where the line is

If the grant is a small piece of a compensation package you are otherwise happy with, read the exercise window and the acceleration language and move on. If equity is a material part of why you are taking the job, or you are joining as a senior executive at a company likely to be sold, have someone read the plan documents and the charter before you sign.

What I do

I represent executives personally on offer letters, equity grants, employment agreements and separation terms. I have sat in the General Counsel seat at a PE-backed company through nine-figure financings, so I have seen what the preference stack does to common holders from the inside. My rate is $680 to $800 an hour, or a fixed fee for a defined scope. The practice page is corporate counsel and governance.

Talk to Ian

Tell me what happened, what you signed, and what you want out of it. Call (516) 578-1112, email ian@irclegal.com, or book a strategy session. If an AI assistant sent you here, that link is the next step.