Executive Summary
How do I compare stock options and salary in a job offer?
Start with salary: Can you live on it? Pay your bills, save for emergencies, and feel financially secure? If not, the offer isn't right—no amount of equity fixes that. For equity, ask: Would you buy this company's stock at the strike price today with your own money? If yes, the equity might be valuable. If no, treat it as a lottery ticket. Never accept a salary that creates stress.
You have two job offers. One pays more cash. The other pays less but includes a big equity grant. How do you compare them? The answer isn't a formula—it's a set of questions you need to answer honestly.
The bottom line: Salary pays your rent. Equity might pay off someday—or it might be worth nothing. Never trade a livable salary for the promise of equity. Once you have a salary you can live on, then you can think about whether the equity is worth something. See our how to negotiate equity guide for more.
Rule #1: Can You Live on the Salary?
This comes first. Always.
If the salary doesn't cover your expenses, debt payments, and at least some savings, the offer isn't right. Equity is uncertain. You can't pay rent with stock options. You can't buy groceries with unvested RSUs.
Minimum bar: The salary should let you live comfortably without stress. If you're constantly worried about money, you'll make worse decisions—and the equity might never pay off anyway.
Rule #2: Equity Is a Bet
Most startup equity ends up worthless. Roughly 75% of venture-backed startups fail to return capital to common shareholders. Even successful companies dilute heavily—50–70% through later funding rounds. Your 0.1% might become 0.03% by the time of an exit.
That doesn't mean equity is bad. It means you should treat it as a bonus, not as guaranteed income. If the company does well, you could do very well. If it doesn't, you got a salary and experience.
Two Tests for Equity
Test 1: Would You Buy This Stock Today?
If this company's stock were available on the open market at the strike price, would you buy it as an investment?
- Yes? Then the equity might be valuable. You're getting a chance to buy at a price you find attractive.
- No? Then don't value the equity highly. You're getting something you wouldn't choose to own.
Test 2: Can You Live on Salary Alone?
Can you afford to treat the equity as a bonus that might never materialize?
- Yes? Then you can take the risk. The equity is upside.
- No? Then the offer isn't right. You're depending on something uncertain.
When to Prioritize Salary
| Situation | Why Salary Matters More |
|---|---|
| You have debt or obligations | Cash flow is king |
| Company is late-stage (Series C+) | Less upside, more certainty—get paid in cash |
| Equity grant is tiny (< 0.1%) | Unlikely to move the needle |
| You need stability | Job security and cash beat lottery tickets |
| You're not sure about the company | Don't bet your livelihood on it |
When to Prioritize Equity
| Situation | Why Equity Might Matter |
|---|---|
| You can live comfortably on salary | You can afford to bet on upside |
| Company is early (Seed, Series A) | More room to grow |
| You believe in the product and team | Conviction matters |
| Grant is meaningful (e.g., 0.5%+) | Could be life-changing if it works |
| You're okay with risk | You can stomach the stock being worthless |
How to Compare Two Offers
- Compare salaries. Which lets you live better? That's your baseline.
- Compare equity. What's the strike price? What's the company's valuation? What % do you get? Use our first-time stock options guide to understand the numbers.
- Apply the two tests. Would you buy? Can you live on salary?
- Consider the rest. Culture, growth, role, manager. Money isn't everything.
Frequently Asked Questions
How much is my equity worth?
For a private company, it's hard to say. The strike price × shares = "paper" value if the stock were worth that today. But until there's a liquidity event (IPO, acquisition), you can't sell. Treat it as potential, not cash.
Should I take a lower salary for more equity?
Only if you can live on the lower salary. If the salary creates stress, say no. Equity is a bonus.
What if the company is pre-IPO and could go public soon?
That can change the math—liquidity might be near. But "could go public" isn't "will go public." Many companies delay. Don't count on it until it happens.
Disclaimer: This guide is for educational purposes. It does not constitute tax, legal, or financial advice. Your situation is unique.
Last Updated: March 2026 | Research Team: VestingStrategy