Equity 101 for Software Engineers at Big Tech and Startups
A growing number of startups and Big Tech companies offer equity - stocks, options, and others - as part of software engineering compensation. However, I've noticed few engineers understand what these mean.
When I was a hiring manager at Uber in Amsterdam, engineers usually focused far more on the base salary, taking little interest in equity. Several people only realized much later - sometimes at the IPO - how big of a deal a good equity package means.
"Why should I care about equity?" is a question I frequently get, especially from engineers who have yet to be issued equity. Here's why: for almost all total compensation packages over $250K in the US and €150K in Europe, an increasing chunk of it is equity. Both publicly traded companies in Big Tech and startups frequently issue meaningful stock to software engineers.
This post attempts to summarize the most common equity compensation setups you might come across, help you understand their value, and point to additional resources. This is the information I wish I knew earlier to understand how equity works at the high-level, and help me do more detailed research when I got offers that contained equity components.
