Sample memo · anonymized real offer
You're being offered the option to buy roughly 0.08% of a Series A startup, vesting over four years — worth somewhere between $0 and $340,000, and the letter leaves out two of the three numbers that decide which.
What you have
"...an option to purchase 12,000 shares of Common Stock at an exercise price equal to the fair market value per share as determined by the Board, vesting over 48 months with a 12-month cliff."
You get nothing for a year. Stay 12 months and 3,000 shares' worth vests at once; after that, 250 shares' worth each month. These are ISOs, the tax-favored kind — good, with one trap (see your calendar).
"...the Option shall terminate ninety (90) days following Optionee's termination of Continuous Service."
If you leave or are let go, you have 90 days to buy your vested shares with your own cash or lose them entirely. This is the clause people discover too late. Buying them could cost you $14,400 plus a possible tax bill, on shares you can't sell.
"...subject to adjustment for any stock splits, dividends, recapitalizations, and future issuances of equity securities."
Translation: every future fundraise shrinks your slice. Your 0.08% today is realistically 0.05-0.06% by exit. That's normal, not a red flag — but price it in.
The numbers this document doesn't tell you
Total shares outstanding
Without it, "12,000 shares" is meaningless — it's the denominator of your ownership.
How to get it: ask "what percentage of fully diluted shares does my grant represent?" Any serious company answers this.
The current 409A price and last preferred price
Together these tell you what you'd pay per share and what investors think shares are worth — the gap is your paper upside.
How to get it: ask for the current 409A value and the Series A price per share. Also a normal question.
What it could be worth — the honest range
Big exit ($1B, ~6 years)
Assumes two more funding rounds diluting you to ~0.055%, full vesting.
Roughly $340,000 net of exercise cost, before tax. Life-changing, not retire-forever. Probability: low single digits.
Modest exit ($150M acquisition)
Same dilution; investors with preferences get paid first.
Roughly $35,000-50,000 before tax. A nice bonus for four years, not a reason to take a below-market salary.
Zero
The most common outcome for Series A companies, historically.
$0, plus whatever you spent exercising. The salary is the only money that's real today. Negotiate it like that's true, because it is.
Your tax calendar
Month 12
Cliff vests. Nothing owed, but your exercise-or-not decision clock quietly starts mattering.
If you exercise
ISO exercises can trigger Alternative Minimum Tax on the paper gain — a real tax bill on money you can't access. Get the spread calculated before you exercise a single share.
90 days after leaving
Your options expire. The decision is: pay cash to keep them, or walk away. Decide what you'd do before you resign, not after.
Three questions to ask before you sign
- "What percentage of fully diluted shares does this grant represent, and what was the price per share in the last round?"
- "What's the current 409A fair market value per share?"
- "Does the company offer an extended post-termination exercise window, and is early exercise allowed?"
Bottom line
This is a standard-shaped ISO grant with one sharp edge (the 90-day window) and two missing numbers that decide whether it's generous or thin. Ask the three questions before signing — companies answer them for people who ask, and asking signals you know what you're doing. Treat the salary as the real money and the equity as a lottery ticket you're partially paying for with your time.
This memo took two minutes. Yours will be about your actual document — your clauses, your numbers, your traps, your questions.
Decode my grant — $29
Founding price. Your document is processed, never stored.