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Say I have a job offer from a company. They say they'll pay me X dollars a month. Can I negotiate to be paid fewer dollars but instead some equity? Is it appropriate to even ask?

Does the answer to this question depend on whether the company is private or public, or on whether it's a new company or an established one?

Related: Negotiate for some equity, however in this question I actively want the equity instead of the dollars.

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  • You can always ask, though for some companies it would probably be a non-starter. Newer companies/startups that haven't yet turned a profit may be more open to the prospect (for obvious reasons). – AffableAmbler Jun 17 '19 at 3:16
  • I assume USA, because you mention "dollars" without qualification. Does your employer offer an Employee stock purchase plan? – Patricia Shanahan Jun 17 '19 at 4:09
  • @PatriciaShanahan it's not the US (there are some ~20 countries that use some form of "dollar"). As for employee stock purchase plans, I don't think it's possible to tell before the interview for many companies - would have to ask during the interview. – Allure Jun 17 '19 at 12:37
  • It would be useful to indicate the country, because issues like whether it is legal to compensate in equity, and whether there are plans supporting doing so, vary from country to country. – Patricia Shanahan Jun 17 '19 at 14:12
  • Taking salary in the form of currency is a method of diversification -- if the company goes bankrupt, you still have the money. The more equity you accept, the greater your risk. Consider all those Enron employees whose retirement was in company stock. – mcknz Jun 17 '19 at 22:33
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The equity has to come from somewhere.

If the company is public, and there is not an employee equity program already set up, it is unlikely that there is an easy way to give you equity through the company itself. If you really want equity, you could allocate part of your salary to purchase shares yourself.

If it is private, it also really depends on the company. More established ones without a culture of employees having stock options would be rather difficult to arrange this, I think. If there are investors owning a large percent, it is likely that the president of the company is trying to maintain > 50% stake, so there is a really limited amount of the company that would be fluid -- and other cofounders/ the first employees would likely already own those, and they would likely not wish to give up their own shares.

A newer company may be more receptive to the idea. They may not have the funds to pay a large salary so would be willing to be able to give up a few of their own shares in order to obtain a highly skilled employee for a minimum of 3 years (the term depends on the contract) at a smaller price in order to jumpstart the company.

If equity is something you are interested in, you really need to ask. I would not expect a large percent of anything unless you are a cofounder, though.

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  • It’s common for senior managers of an organizations to receive options as part of their compensation — it’s very reasonable to expect that OP could ask for and receive options if he/she is entering a relevant role at a large organization. – Jay Jun 17 '19 at 14:03
  • @Jay I said it depends on the culture of the company. If that organization hasn't done something like that in the past, they are likely not going to go out of their way to do it for one person -- unless perhaps if that person would really serve a key role – さりげない告白 Jun 18 '19 at 0:47
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Yes, of course, ask. Keep in mind that you are asking to invest in the company.

Company owners generally consider it a compliment when somebody asks to invest (unless the would-be investor is some sort of Wall Street pirate, which you are not).

Don't say "can I trade some of my salary for equity?" though. Say, "is there some way I can get shares of your company?" Let them suggest the lower salary.

They may have a way to grant you stock options or restricted stock units. If so, good. If they don't have a program like that, they'll tell you.

At any rate you will not cause yourself any trouble by asking this question.

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Yes, you can, and should, ask.

Before the conversation, you should inform yourself with the various ways ownership rights and cashflow claims are distributed in organizations like your own.

In almost all cases, employees are given vesting options instead of shares. These are private contracts with specific terms and are likely not tradable (there isn’t a secondary market for the option, or trading may be prohibited) before an IPO.

Google can help you learn more - here was a good result that I found: https://medium.com/jme-venture-capital/how-to-assign-stock-options-in-early-stage-startups-c5dea4a8d2c7

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