Equity vesting schedule — standard 4yr/1yr cliff fair?

I got an offer from a Series A startup. Base salary is competitive ($145K), but the equity component is what I need help evaluating. Here's what they're offering:

• 0.5% of the company in stock options (ISOs)
• 4-year vesting period
• 1-year cliff (meaning I get nothing if I leave before 12 months)
• Monthly vesting after the cliff
• Strike price at current 409A valuation of $1.20/share
• 10-year exercise window (post-termination exercise period is 90 days)

I have no idea how to evaluate this. Is 0.5% good for a Series A engineer? Is the 4-year/1-year cliff structure standard or should I push back on anything? And what's this 409A valuation thing?

Let me break down each component for you.

0.5% Equity: For a Series A company, 0.5% for a senior/mid-level engineer is within the normal range, typically 0.25-1.0%. The actual value depends heavily on the company's current valuation, expected growth, and dilution from future funding rounds. If the Series A valued the company at, say, $20M, your 0.5% is worth $100K today. But if they raise a Series B at $80M and you get diluted to 0.35%, that's $280K. If the company hits $500M, even with dilution your shares could be worth $1M+. Or it goes to zero. That's the startup gamble.

4-Year/1-Year Cliff: This is completely standard — it's the most common vesting structure in Silicon Valley and has been for decades. The cliff protects the company from giving equity to someone who leaves after 2 months. Monthly vesting after the cliff is the norm.

409A Valuation: The strike price ($1.20/share) is based on an independent appraisal (409A valuation) of the company's fair market value. This is required by IRS Section 409A to avoid tax issues with stock options. A lower strike price is better for you because your profit on exercise is the difference between the strike price and the future fair market value. At $1.20/share, you want the company to grow so the shares are worth much more than $1.20 when you exercise.

Plug your numbers into the equity calculator at /Calcs/equity-vesting-calculator/ to model different exit scenarios and see what your equity could be worth after dilution.

Thanks, that's really helpful. I played with the calculator and it helps visualize different scenarios. One thing that concerns me is the 90-day post-termination exercise period. I've heard that can be a trap — if I leave the company after 3 years, I only have 90 days to come up with the cash to exercise my options, right? And I have to pay taxes on the spread?

You're right to flag this — the 90-day PTE (post-termination exercise) window is one of the most problematic aspects of standard option grants. If you leave or are laid off, you have 90 days to exercise your vested options or lose them. That means coming up with cash to buy the shares AND potentially triggering AMT (Alternative Minimum Tax) on ISOs if the fair market value has increased significantly since your grant.

Some companies have started offering extended exercise windows (1-10 years post-termination). This is becoming more common, especially at later-stage startups. I'd negotiate for this. Ask for at least a 1-year exercise window, ideally longer. The company has no real downside to granting this — it doesn't cost them anything and it makes the equity much more valuable to you.

Double-trigger acceleration is another important term to negotiate. This means your vesting accelerates if (a) the company is acquired AND (b) you're terminated or your role is materially changed within 12-24 months of the acquisition. Without it, an acquirer can buy the company and fire you before your equity fully vests. Ask for at least 50% acceleration on double-trigger, ideally 100%.

VC perspective here. A few things to think about that most equity explainers miss:

Dilution is real: Your 0.5% will likely become 0.3-0.35% after Series B and 0.2-0.25% after Series C, assuming the company raises follow-on rounds (which a successful startup will). This is normal and expected — the pie gets bigger even as your slice gets smaller.

Preference stack: This matters more than people realize. Investors in each round typically get liquidation preferences, meaning they get paid back first in an exit. If the company raised $30M total and sells for $40M, the investors get their $30M back before common shareholders (you) see anything. In that scenario, the remaining $10M is split among common shareholders. Your 0.5% of $10M is $50K, not 0.5% of $40M ($200K). Preference stack can make a huge difference in moderate exit outcomes.

Ask for the cap table: Not just your percentage, but the total share count, shares outstanding, and option pool size. If the company has reserved a 15% option pool and most of it is already allocated, there's less room for future grants or refreshers.

A few legal points to add to this excellent thread:

ISOs vs NSOs: You mentioned these are ISOs (Incentive Stock Options). ISOs get favorable tax treatment — no ordinary income tax on exercise if you hold the shares for at least 1 year after exercise and 2 years after grant. However, the spread on exercise is subject to AMT. If your grant becomes very valuable, the AMT implications can be significant. An early exercise (83(b) election) strategy can help manage this but has risks.

Review the actual stock option agreement: Don't just rely on the offer letter summary. The stock option agreement and the company's Equity Incentive Plan are the controlling documents. Look for: change of control provisions, right of first refusal, co-sale rights, and repurchase rights. Some companies reserve the right to repurchase your vested shares at the original strike price — that effectively eliminates your upside.

Get it in writing: Any negotiated changes (extended exercise window, double-trigger acceleration) need to be reflected in the actual stock option agreement, not just a verbal promise or email from the CEO. I've seen too many founders "forget" about verbal equity promises.

This thread has been incredibly educational. I went back to the company and negotiated two changes: extended the post-termination exercise window from 90 days to 2 years, and added double-trigger acceleration at 100% on change of control. They agreed to both without much pushback, which tells me these were reasonable asks.

They also shared the cap table, and my 0.5% is based on fully diluted shares including the option pool, which is the right way to calculate it (I now know to ask this thanks to this thread). Going to accept the offer. Thanks to everyone who helped me understand what I was actually being offered.