Tech Job Offer Contract Review: Equity Focused
Tech jobs are equity-heavy. Half your comp might be in options/RSUs. This guide covers equity-specific terms, vesting schedules, and tech red flags.
Tech-Specific Compensation
TECH COMP STRUCTURE: Salary + Bonus + Equity (options or RSUs). Equity is often 30-50% of total comp. STOCK OPTIONS: Right to buy company stock. ISOs = tax advantaged. NSOs = regular tax. RSUS: Actual shares granted. Better than options (no purchase needed). EXERCISE PRICE: Price you pay to buy options. Can be $0 (good for you) or current valuation (you pay full price). VESTING: Standard 4-year with 1-year cliff. ACCELERATION: Equity vests faster if company is acquired or you're fired without cause.
Tech Red Flags
(1) CLAWBACK ON SIGNING BONUS: Tech companies often have clawbacks. Red flag if >24 months. (2) LONG VESTING CLIFF: 2-year cliff is too long. (3) NO ACCELERATION: "If we're acquired, you get nothing unless you're still here." Bad. (4) BROAD NON-COMPETE: "Can't work in tech for 2 years." Kills career. (5) NO DETAIL ON EQUITY: How many options? Strike price? Company valuation? They won't say. Red flag. (6) COMPANY VALUATION DECLINING: Check Crunchbase. If valuation dropping, equity worth less. (7) BAD FUNDING HISTORY: Series A 5 years ago, no Series B. Company unlikely to exit. Equity useless.
Tech Negotiation Tips
ASK FOR: (1) Shorter cliff (6 months). (2) Single-trigger acceleration (acquisition = vesting acceleration regardless of employment). (3) Extended exercise window (2 years to buy options after leaving). (4) Refresher grants (new equity each year). (5) Narrow non-compete ("direct competitors in SaaS CRM, 50 miles, 1 year"). (6) Full details on equity (grant size, strike, company val, exercise price).
Frequently Asked Questions
What's a good equity grant for a tech role?
Depends on role, company stage, location. Senior IC: 0.1-0.5% of company. Manager: 0.3-1%. Director: 0.5-2%. Use Levels.fyi for benchmarks.
Should I sign if there's no acceleration clause?
Risky. If company is acquired day 1 and you're still here, you're golden. But if you leave or company is sold and you're fired, you lose everything unvested. Negotiate for acceleration.
What happens to my tech stock if company goes public?
Options: You can buy shares at strike price (hopefully way lower than IPO price). RSUs: Convert to company stock. Either way, stock becomes liquid after lockup period (usually 6 months post-IPO).
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