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When I joined a start-up 8 months ago, I was offered a 2.5% equity along with a fixed remuneration. I trusted the founder and didn't bother to ask for equity docs. After 6 months, there were some arguments between me and the founder based on location constraints (Initially I was given a freedom to work from home but later he asked me to move out which wasn't possible for me).

That is when he told he will have to re-consider the equity. We continued working for 2 more months and then I brought up the topic of equity again on which he said I lost the equity in the company when I denied to move out of my home location for the company.

In my situation, I know I should have gotten the equity docs right when I started working for the company, but he said equity is offered only after a year and this is a standard practice. Also, the equity was offered with a 2 year vesting period.

Since I am a technical guy and don't know the business side of things I am hoping to understand how equity and becoming vested generally works at companies.

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    I'm concerned this may end up too localized - IMO, this will vary due to industry and location. I'm doubtful that there is a standard at all here.
    – bethlakshmi
    May 17, 2013 at 17:26
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    This would be more appropriate for the startup Stack Exchange site given this is completely specific to startups.
    – enderland
    May 17, 2013 at 17:32
  • I tried searching for appropriate site in the StackExchange network before putting up the question but couldn't find answers.onstartups.com
    – John Doe
    May 17, 2013 at 18:44
  • Can't the admins migrate it over there? I can't promise it wouldn't get closed there for some reason or another, but they routinely handle equity/cliff/vesting questions over there.
    – rbwhitaker
    May 17, 2013 at 19:55
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    @JohnDoe I edited your question to make it more appropriate for this site. The specifics of your situation are difficult to address without a lawyer but I think the general question can be answered here like Chad has done so far.
    – enderland
    May 18, 2013 at 17:18

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equity is offered only after a year and this is a standard practice

The standard way of offering any compensation is in writing. Many times there are benefits and offers in these compensation packages that specify when such perks will be granted and what conditions apply to the offer. In this manner such offers are often considered enforceable and could provide a cause for action against your company should they not honor the agreement, though this is a question for a lawyer.

the equity was offered with a 2 year vesting period. Is that a standard practice as well?

Most benefit packages that include retirement, stock options, or other non standard (cash) remuneration have a vesting period. Many are 5-7 years though it seems lately I see quite a few with 3 year vesting periods. So even by that standard this 2 year vesting period seems generous.

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