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My friends and I have been working in a startup for over 1 year. They have spent more time in this company and have already completed 2 years of work.

During this time, we participate in a project that is fundamental to the company and we have good relationship with the CEO. I feel that the salary we receive is not enough because we are not entitled to the overtime we do.

I had the idea to suggest that we win shares of the company because it is possible to grow and we can take some money besides a simple salary.

Is it fair to ask for shares? The company is in Europe.

Edit: I asked for equity shares, the boss said it was fair. I did it only after speaking with my colleagues about it. None wanted to ask it, so I asked myself using the HR manager to pass my expectations for the CEO. He found it a good solution because we will have to work a lot until the end of year for getting new customers. Thank you

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    Are you ready to leave if they say "No."?
    – Bebs
    Jul 1, 2019 at 11:48
  • Possible duplicate of How should I properly approach my boss if I'm feeling underpaid?
    – Philipp
    Jul 1, 2019 at 13:40
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    Bosses will rarely raise you because they feel about your personal situation (house, family, taxes...). They will raise you because they are scared you leave and they need you.
    – Bebs
    Jul 1, 2019 at 14:49
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    The thing that bothers me here is that you're doing overtime for free. If you're not getting paid with money or through TOIL you should tell them that you'd like to start getting something for the overtime or else you may have to stop doing it. By all means suggest stock/equity/bonds/milk tokens.
    – Smock
    Jul 1, 2019 at 15:49
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    Note: That equity is not normally given in lumps. You usually get an allocation that vests based on time. The idea being the more you put into the company the more you own.
    – Martin York
    Jul 2, 2019 at 20:10

2 Answers 2

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Yes, you should have a conversation with the owners about earning equity.

Before your conversation, you should educate yourself on why and how equity compensation is typically distributed in new ventures. Fortune has a decent primer, but make full use of Google and have some conversations with people with startup experience.

A brief rundown of what you ought to know going into the conversation:

1. Why would your company choose to compensate you with equity? Cash compensation is cheaper to the company and can have all of the same retention incentives as equity. Know that paying you a "dollar" in equity will cost your company more than paying you a dollar in cash. The biggest reason that early companies choose to distribute equity as compensation is simply because they don't have enough cash - so it is a good alternative to asking for a cash raise in a new venture.

2. What is the total value per year in equity or equity-equivalent compensation you expect? How much more do you think you should be earning per year or per quarter? Your equity compensation is likely to vest over time, so this would be the vesting rate you're targeting.

3. What conditions are you willing to accept? You equity compensation will likely vest according to conditions (e.g., time in the company and/or completion of specific milestones). You may even be required to stay with the company through an IPO to be able to exercise distributed options. Know what you are willing to sign on for.

4. What types of compensation are you willing to accept? Equity compensation is rarely distributed to employees as common stock. You are more likely to receive options or, in some cases, restricted shares. Different equity and equity-like compensation models have different mechanics - figure out which ones you think match your financial expectations. Greater liquidity, flexibility, and preference all come at a cost.

5. How will your compensation perform in liquidity events (e.g., IPOs) or future rounds of funding? You should know whether or not the compensation you are asking for has features like dilution protection. This is really an extension of the point above, but these are the events that allow you to "cash out," so you really need to understand how they work to be able to calculate the present value of any equity compensation.

Good luck in the conversation! You should always negotiate for better compensation if you feel you are underpaid - you're on the right track!

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    Great answer overall along with technical details. (Reached voting limit for the day. Will upvote tomorrow).
    – Nimesh Neema
    Jul 1, 2019 at 12:47
  • Number 1: because we are crucial for the company success and we are on overdue without payment. The market here is tough, people would leave and without retention. Plus, Europe taxes are just too high, if they pay us more money we endup just paying more taxes for the government, not more money on our pockets.
    – lambdapool
    Jul 1, 2019 at 14:41
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    @lambdapool I don't know any European country with an income cap, if they pay you more, you do have more in your pockets.
    – Frank Hopkins
    Jul 1, 2019 at 15:39
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Is anything along the lines of receiving stock options mentioned in your original job offer? Please go through it again before talking with your boss.

Is it fair to ask for shares?

Nothing is stopping you to talk about it to your boss. You mentioned you have a good relationship with the CEO. You can discuss about it with them face-to-face or over email as per your convenience.

If nothing is mentioned in the offer letter, it would be upto the CEO/investors discretion and company's business/financial plans going forward to make any decisions along these lines.

As mentioned in the comment, nothing regarding stock options/benefits is mentioned in the offer letter. You are not entitled to receive any benefits apart from your salary from the company as per your offer.

Since the project you have worked on is fundamental to the company, and you have worked on it extended hours without overtime pay, you can certainly ask for any benefits/options. Stack-holders may take a call on it if they realize that your contributions are valuable & they have room to offer any such options. You may get asked to commit on certain project(s) for certain number of years and any benefits may be subject to negotiations between you two parties.

Please note that since nothing about it is mentioned in the offer, there's no guarantee that you will/may receive any.

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    no, we don't have stock options on our job offer at all.
    – lambdapool
    Jul 1, 2019 at 11:05
  • Ask, and they might even say yes, but my prediction is that you'll eventually leave this organisation with the same salary (plus maybe increases), no overtime, no shares/options of any kind. Just your final pay slip and anger and bitter disappointment. The time to ask for and get this in writing is during negotiation before you start work, or if you're particularly unscrupulous 2 weeks before a demo to major investors.
    – Justin
    Jul 1, 2019 at 12:32
  • Yes, I'm perfectly aware that we are not entitled for equity.
    – lambdapool
    Jul 1, 2019 at 14:42

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