Your review went well. Your manager says so, the feedback says so, and then comes the part you were waiting for. There is not much budget for salary increases this year, but they would like to give you a grant of shares instead. A lot of them, they add, and they could be worth far more than a raise one day. You smile and say thank you, and then on the way home you realise you have no idea whether that was a good offer.
It might be. It is worth understanding before you decide how you feel about it.
Start with what you are actually being given. Shares, options and restricted units are different things. With options, you usually have to pay a set price to buy the shares later, sometimes a large sum, and sometimes with a tax bill attached. Ask which kind it is, and ask for the documents rather than a summary.
Then ask how they vest. Most grants are released over several years, often with nothing at all until the first anniversary. If you leave after eighteen months, how much is really yours? And what happens to unvested shares if the company is sold?
Ask what the number means. Ten thousand shares tells you nothing on its own. What percentage of the company is that, and how many shares exist in total? Will more be issued when the company raises money, making yours a smaller slice?
Most important of all, ask how you would ever turn them into money. In a private company there may be no way to sell until a sale or a listing that may never come. Plenty of people have held shares for years that ended up worth nothing.
So value the offer at a discount, perhaps a steep one. A pay rise pays your rent this month and lifts every future raise built on top of it. Shares are a bet. A bet can be worth taking, but it should not quietly replace your salary year after year.
It is perfectly reasonable to ask for some of both. You can say, I appreciate the shares, and I would still like to talk about base pay. Is there anything possible there?
Whatever you decide, decide it with the numbers in front of you, not the story.
– Asael Shinder
