Equity compensation is ownership interest in a company granted to an executive as part of their employment package, typically in the form of stock options (the right to purchase shares at a fixed price) or restricted stock units (RSUs, which vest and convert to shares over time). It is the primary mechanism for aligning executive incentives with company value creation, and at growth-stage companies it is often the most valuable component of total compensation.
Stock Options vs Restricted Stock Units
The two dominant forms of executive equity compensation are stock options and restricted stock units (RSUs). Stock options give the holder the right to purchase company shares at a set price (the exercise or strike price) over a defined period — the value comes from the spread between strike price and market price at exit or IPO. RSUs are grants of actual shares that vest over time and convert directly to ownership without requiring a purchase.
At private growth-stage companies (Series A–D), stock options are more common because the company shares have no liquid market value yet — options allow executives to participate in upside without a cash outlay. At pre-IPO and public companies, RSUs become more prevalent because their value is tied directly to a liquid share price.
Stock options
Right to purchase shares at a fixed strike price. Value is realised at exit or secondary sale. Common at private growth-stage companies.
RSUs
Restricted stock units that convert directly to shares upon vesting. More common at pre-IPO and public companies where share value is liquid.
Vesting schedule
The timeline over which equity is earned. Standard structure: 4-year vest with 1-year cliff, monthly thereafter.
409A valuation
The independent third-party valuation of common stock used to set option strike prices. Updated periodically as the company raises new rounds.
Typical Equity Grants by Role — Series B SaaS (US, Fully Diluted)
Vesting and the 4-Year Cliff Structure
Most equity grants at growth-stage companies vest over four years with a one-year cliff: 25% of the grant vests at the 12-month mark, and the remaining 75% vests monthly or quarterly over the following three years. The one-year cliff ensures the executive has meaningfully contributed before any equity is earned.
Equity grants for VP and C-suite hires at Series B–D companies typically range from 0.1% to 1.0% of the fully diluted company, depending on function, seniority, and company stage. CTO and CRO grants tend to sit at the higher end; VP-level functional leaders at the lower end.
“A 0.5% equity grant means nothing without context: current valuation, preferred stack, dilution expectations, and a credible exit scenario. Candidates who don't ask for this information are not evaluating the offer — they're guessing.”
Evaluating Equity as an Executive Candidate
Evaluating an equity grant requires understanding the company's current 409A valuation, the number of fully diluted shares outstanding, the preferred stack above common shares, and realistic exit scenarios. A 0.5% grant at a $50M valuation is not comparable to a 0.2% grant at a $300M valuation with a clear IPO path.
Majhi Group helps the companies we work with structure equity narratives that are compelling and credible — not inflated. The goal is to give the candidate enough information to make an informed comparison, not to obscure the maths.