1. Stock Option Grant Guidelines
The following guidelines serve as Gordon Daugherty’s personal cheat sheet of sorts for granting equity to new employees via stock options
Insights and Recommendations
The reason the target equity amounts are reduced following each round of funding is to reflect both the reduced risk of the company as well as the reduced amount of future dilution
The earlier the stage of the company, the greater the variance in target equity for specific situations versus what is shown in this document
Sales professionals typically get less equity-based compensation than their counterparts at a similar level. This is because sales professionals already have up-side cash compensation potential via their sales commission plan.
Exceptions to stock guideline should be reviewed with the Board of Directors before submitting an offer
VP offers should likely be reviewed with the Board before submitting an offer, even given the guidelines
An official stock option plan (aka – “employee incentive plan”) should be properly instituted and approved (usually a board approval) before issuing stock options to employees
Important legal paperwork and associated approvals are typically required with each issuance of stock
Disclaimer: You should always seek advice from certified professionals (ie – accountant, attorney) when dealing with something as important as issuing equity

2. Stock Option Grant Guidelines for New Employees
% Equity (on fully diluted basis)
Job Level
Pre-Seed
Post-Seed
Post Series A
Entry
0.15%
0.12%
0.09%
Professional
0.30%
0.25%
0.18%
Sales Professional
0.20%
Manager
0.60%
0.50%
0.35%
Director
1.25%
1.00%
0.75% VP
2.50%
2.00%
1.50%
Board Director (2 yrs)
(+ very light advisory work)
1.00 – 1.25%
0.75 – 0.90%
“Pre-seed” does not mean first founders or very first couple of employees but rather after the MVP has been built and possibly some initial paying customers. It might also follow a small friends-and-family round of funding.
Initially try to close candidates at ~75% of the stock quantities listed above, treating those as “no higher than”.