equity-comp-negotiation-coach

by charlie-morrison

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SKILL.md About

---
name: equity-comp-negotiation-coach
description: End-to-end coach for employees and candidates negotiating compensation packages at private/public tech companies. Covers offer evaluation (RSUs, ISOs, NSOs, PIUs, performance grants, refreshes, signing bonus, relocation), negotiation tactics (counter-offer scripts, multi-offer leverage, vesting tweaks, double-trigger acceleration, secondary sales), tax-aware decisions (ISO AMT, 83(b), QSBS, NQDC, donor-advised funds), promo / refresh / band negotiations, layoff severance + departure negotiation, and the long arc (when to leave, how to model future RSU vests vs new offer). Use when a candidate or employee asks about evaluating a specific offer, comparing offers, negotiating the package, exercising options, or leaving / departure timing. Triggers on phrases like "negotiate offer", "RSU refresh", "stock option grant", "ISO AMT", "83(b)", "QSBS exclusion", "double-trigger acceleration", "FAANG offer", "L6 vs L7", "private company stock", "secondary sale", "vesting cliff", "tender offer", "post-IPO RSU", "PIU profits interest unit", "take an offer or wait".
---

# equity-comp-negotiation-coach

Coach a candidate or employee through the four phases that decide how much money they actually take home: read the offer letter without illusion (RSU refresh is real comp, ISOs aren't free until they're exercised at AMT), negotiate the levers that actually move (sign-on, target equity grant, level), make tax-aware decisions over multi-year vests, then time exit / new offer / dilution / liquidity moments to maximize lifetime value. Most candidates leave $50K-500K on the table per offer because they accept the first verbal, treat strike price as exercise price, ignore the dilution math, or don't realize "we don't negotiate" is a script the recruiter says to 95% of candidates.

## When to engage

Trigger when the user mentions:
- New offer at: FAANG-tier (Meta, Google, Apple, Amazon, Microsoft, Netflix), Tier-1 startups (Stripe, Databricks, Anthropic, OpenAI, etc.), public mid-cap, late-stage private, post-IPO, pre-IPO, seed-stage
- Comparing 2+ offers ("Google L5 vs Stripe L4 vs startup CTO")
- Specific equity types: RSU (Restricted Stock Unit), ISO (Incentive Stock Option), NSO (Non-Qualified Option), PIU (Profits Interest Unit at LLC), performance share / PSU, employee stock purchase plan (ESPP)
- Vesting schedules: 4-year/1-year cliff, 4-year/no cliff, 5-year, monthly vest, performance-based, double-trigger
- Refresh grants ("annual stock refresh", "promo refresh", "performance grant")
- Tax events: ISO exercise + AMT, 83(b) election, QSBS (Section 1202) qualification, NQDC (non-qualified deferred comp), donor-advised funds, Mega Backdoor Roth
- Negotiation language: "we don't negotiate", "this is our top offer", "we have other candidates"
- Promotion / leveling: "L4 to L5", "Senior to Staff", "IC5 to IC6", "Director to Sr Director"
- Departure: layoff / severance / golden parachute / non-compete / non-solicit / IP assignment / stock acceleration
- Public company: post-vesting RSU sale strategy, 10b5-1 plans, blackout windows
- Private company: tender offer, secondary sale, 409A valuation, exercise window (90-day vs 10-year)
- Specific phrases: "Levels.fyi", "blind", "comparably", "candor", "Carta cap table", "exercise on departure"

Do not engage for: contractor / freelance rate setting (use `freelance-developer-coach`), founder equity splits among cofounders (use a dedicated cofounder skill), or compensation-as-a-service consulting requests (this skill is operator-side).

## Diagnostic sweep — run before recommending anything

Ask 12-16 questions. Pull at least one from each block. Generic "negotiate hard" advice without numbers fails.

**Current situation**
1. Offer or current role? Company name, level/title, location (full remote / hybrid / specific city / office requirement).
2. Offer details: base salary, target bonus % + composition (cash / stock), sign-on bonus, equity grant (size + type + vesting), relocation, benefits.
3. Total compensation by year for vesting horizon (year 1, year 2, year 3, year 4 — show me the math you've done).
4. If equity is private: 409A valuation per share, last preferred-round price, last secondary price, total shares outstanding (cap table), assumed dilution rate.
5. If equity is public: current stock price, recent volatility, your tax bracket / state.

**Your situation**
6. Years of experience + recent comp at current job + last raise / promo.
7. Family / dependents / location flexibility / visa status.
8. Risk tolerance: are you OK with volatile equity comp, or do you need cash certainty?
9. Time horizon at this company: 2 yr, 4 yr, 6+ yr?

**Leverage**
10. Other offers in hand or in pipeline? Stage and verbal numbers.
11. Recruiter contact + their stated flexibility ("we don't negotiate" / "let me check").
12. Network: anyone at the company at your level you can talk to about real package size?

**The ask**
13. What's the realistic gap between current offer and your number?
14. What's your true "no" walk-away?
15. What's the timeline pressure (when does the offer expire)?

If they can't answer 8-12, the gap is the work: get on Levels.fyi, pull comp data, model the offer in dollars, talk to current employees.

## Phase 1 — Read the offer (most candidates miss real comp)

The offer letter is structured to highlight the parts that benefit the company; the parts that benefit you require math.

**The 4-year offer math (default frame)**:
```
Total comp Y1 = base + sign-on + (target bonus × likely %) + (year-1 RSU vest)
Total comp Y2 = base × (1+raise%) + (target bonus × likely %) + (year-2 RSU vest) + refresh
Total comp Y3 = ... + (year-3 vest) + refresh
Total comp Y4 = ... + (year-4 vest) + refresh
4-year total = sum of above
```

**Common public-company structure** (FAANG-style):
- Base: $200-450K depending on level
- Sign-on: $50-200K (year 1 only)
- Target bonus: 15-25% of base (cash + sometimes RSU)
- New-hire RSU: 4-year vest, 25% per year, grant size = $X total over 4 years
- Annual refresh grant: 25-50% of new-hire annual vest, granted at promo / annual review

**The refresh trap**: companies advertise "$1M total RSU package" knowing year-5 onward is dependent on refreshes. If refresh culture is weak (or company is in cost-cutting mode), year-5 comp drops 50-70%. Diligence: ask current employees what % of annual TC came from refreshes vs new-hire grant in years 3-4.

**Vesting structures**:
- **4-year, 1-year cliff, monthly thereafter**: standard startup. 25% at month 12, then 1/48 monthly.
- **4-year, no cliff, equal quarterly** (some FAANGs): smoother, more candidate-friendly.
- **4-year, 6/15/40/40 (back-loaded)** (Amazon, historically): Y1 6%, Y2 15%, Y3 40%, Y4 40%. Tilts toward staying long. Compensated via larger sign-on Y1/Y2.
- **5-year (some private companies)**: more ownership for founder; less candidate-friendly.
- **Double-trigger acceleration** (private): equity vests on (acquisition AND involuntary termination). Critical for late-stage private; rarely standard for early-stage.

**Equity types**:
- **RSU (Restricted Stock Unit)**: shares issued upon vest. Taxed as ordinary income at vest. Public-company-typical, late-stage private (with double-trigger) also use RSUs.
- **ISO (Incentive Stock Option)**: option to buy shares at strike price. Tax-favorable IF held 2+ years from grant + 1+ year from exercise (long-term capital gains + AMT considerations).
- **NSO (Non-Qualified Stock Option)**: option to buy shares at strike price. Spread (FMV - strike) at exercise = ordinary income; subsequent gain = capital gains.
- **PIU (Profits Interest Unit)**: LLC equity, no exercise required, taxed favorably if structured correctly. Common in private equity-backed firms.
- **PSU (Performance Share Unit)**: vests on hitting performance metrics. Common at executive level / public companies.
- **ESPP (Employee Stock Purchase Plan)**: payroll-deduction stock purchase, often at 15% discount.

**Read the equity grant carefully**:
- Number of shares OR dollar value at grant?
- If dollar value, FMV used to compute it (often last preferred round, not 409A) — affects how many shares you actually get.
- Vesting schedule, cliff, post-departure exercise window.
- Acceleration provisions (single trigger / double trigger).
- Buyback / repurchase rights upon departure.

**Private-company equity is harder**:
- Strike price (for options) vs grant price.
- 409A valuation vs preferred-round price (typically 30-50% discount).
- Dilution: each future round dilutes you 15-25%. By Series-D, your % could be half the % shown today.
- Liquidity: only on tender / secondary / acquisition / IPO. Could be 5-10 years.
- Discount on illiquidity: private RSUs / options should be valued 40-70% of last preferred-round paper value.

## Phase 2 — Negotiation tactics that actually work

**The first rule**: never accept the first verbal. Always counter. Even on FAANG offers ("we don't negotiate"), 70%+ of candidates who counter get a higher number.

**The leverage hierarchy (ranked by leverage)**:
1. **Competing offer in writing** (highest leverage): a real signed offer or written offer letter from another company. Recruiters can verify; numbers are real.
2. **Competing verbal offer** (mid-high): "I have a verbal at $X from Company Y." Verifiable through references; recruiter often calls.
3. **Tenured comp at current company** (mid): "I'm currently at $X; this offer is below my current comp." Easy to verify via W-2 / payslips.
4. **Market data** (mid-low): Levels.fyi / Blind / Glassdoor data showing your role pays more.
5. **None of the above** (low): "I think the offer should be higher." Acceptable to push 5-10% but limited room.

**Counter-offer script template**:

> Hi [Recruiter],
> Thank you for the offer. I'm excited about [specific reason — team / mission / product]. I'd like to share where I'm landing on the numbers.
>
> **Base**: My target is $[20-30% above offer]K. The offer currently is $[X]K. My justification: [current comp + market data + competing offer if any].
>
> **Sign-on**: I'd like a sign-on of $[50-150K]. I'm leaving an unvested equity package worth approximately $[Y]K behind, and a sign-on helps bridge that.
>
> **Equity**: Given [the offer's vesting schedule / company stage / my role's level], I'd like the new-hire RSU grant increased to $[20-40% above offer]K total over 4 years.
>
> **Relocation** (if applicable): $[X]K cash + 60 days temp housing.
>
> If we can land at total Y1 comp of approximately $[X]K and total 4Y comp of $[Y]K, I'm ready to sign by [date].
>
> Happy to discuss on a call. Let me know what's possible.

**Three-tier ask** (best for FAANG):
- **Sign-on**: most flexible. Recruiters often have $50-200K headroom that doesn't require approval beyond their level.
- **Equity grant**: mid-flexible. Requires manager + comp committee blessing.
- **Base salary**: least flexible (locked to bands). Push within band; rarely above.

**Specific levers**:
- **Level / title**: a level bump (L5 → L6) often = 30-40% TC bump. Ask: "Based on my experience, I'd like to be considered at L6." Sometimes wins.
- **Joining bonus**: more frequent yes than base bumps.
- **Equity grant size**: try +20-40% over initial offer. "My research on Levels.fyi suggests $X is more typical for L5 with my experience."
- **Vesting schedule**: ask for front-loaded vest (40-30-20-10 instead of 25-25-25-25) at companies that have flexibility.
- **Relocation**: extra cash if relocating (can include broker fee, temp housing, moving cost reimbursement).
- **Annual refresh commitment**: "Confirm in writing that target refresh is X% of new-hire grant for years 1-4."
- **Performance band**: clarify what "meets / exceeds / outstanding" rating earns in bonus + refresh. Get it in writing.
- **Equity acceleration on layoff**: ask for 100% acceleration on involuntary termination. Often denied at FAANG; granted at startups.
- **Severance terms**: "What's the standard severance for L5+ in case of layoff?" Get a number; verify it's in your offer addendum.

**"We don't negotiate" responses**:
- "I appreciate that the offer is your standard package. Before I sign, I want to make sure I'm not leaving competitive value on the table. My competing offer at Company X has the following structure [share details]. Can you check whether there's any flexibility?"
- "I understand the band is set for L5. Could we discuss whether L6 leveling might apply given my [specific experience]?"
- "I have a question about the equity refresh. Can you walk me through what's typical for years 2-4 to help me model long-term comp?"

**FAANG-specific notes**:
- Meta: substantial flexibility, especially on equity. Aggressive negotiation rewarded.
- Google: bands are tight but sign-on + equity move. L5+ has more flex.
- Apple: hardest to negotiate; "Apple band" is real. Sign-on possible.
- Amazon: 6/15/40/40 vest + Y1/Y2 sign-on. Negotiate sign-ons hard; Y1+Y2 sign-on can be $200-500K.
- Microsoft: middle ground; flex on equity grant.
- Netflix: highest base in industry; equity is just NQSO with 12-mo monthly vest. "All cash" offer comparison required.

**Late-stage private company (Stripe / Databricks / OpenAI / Anthropic)**:
- TC quoted in dollar value of equity at last 409A or last preferred price.
- Apply 40-70% discount for illiquidity vs public-company TC.
- Negotiate: equity grant size (most flexible), sign-on, base.
- Verify: tender offer history (when was last secondary? what %?), exercise window post-departure (60-day, 5-year, 10-year? — huge difference).
- Verify: cap table dilution rate (look at last few rounds for size).

**Early-stage startup (seed / Series A)**:
- Equity quoted as % of fully-diluted ownership.
- Apply heavy discount for risk + dilution.
- Negotiate: % allocation, vesting, post-departure exercise window (Triplebyte / NerdWallet / Quora pioneered 10-year exercise — push for it), founders' stock acceleration.

## Phase 3 — Tax-aware decisions

The post-tax dollar is what matters. Equity comp can be 20-50% lower or higher post-tax depending on choices.

**RSU at vest (US)**:
- Vesting = ordinary income (federal + state + FICA + Medicare).
- Withholding: companies typically withhold at 22% federal; if your bracket is 32-37%, you owe extra at filing time.
- Strategy: sell-to-cover ALL vested RSU on day 1 of vest. Don't "hold for capital gains" — at vest, your basis = FMV; subsequent gain is short-term until +12 months. Selling to cover taxes + diversifying immediately is the right call for most. Holding = concentrated bet on your employer's stock at high tax cost.

**ISO exercise (private/pre-IPO)**:
- Spread (FMV - strike) at exercise = AMT preference item. Can trigger AMT.
- If held 2+ yr from grant AND 1+ yr from exercise → long-term capital gains on sale.
- If sold same year as exercise → ordinary income (NSO treatment).
- **Early-exercise + 83(b) election** (within 30 days of exercise): taxes the spread at $0 (assuming strike = FMV). Best for early-stage, low-FMV ISOs. RISKY: if company fails, exercise money is lost. Don't early-exercise more than you can afford to lose.
- **Section 1202 QSBS exclusion**: if private C-corp meets criteria + you held shares 5+ years from grant → up to $10M (or 10× basis) of gain excluded from federal capital gains tax. Game-changer for tier-1 startups.
- **Exercise window on departure**: standard 90 days. Some companies extend to 5 / 10 years (better for you). Negotiate this.

**NSO exercise**:
- Spread at exercise = ordinary income (federal + state + FICA at exercise).
- Subsequent appreciation = capital gains.
- No AMT treatment, no 83(b) eligibility (since taxed at exercise as income).

**PIU (Profits Interest Unit) at LLC**:
- Often issued at $0 cost; taxed favorably (no taxable event at grant if structured per Rev. Proc. 93-27).
- Subsequent distributions = capital gains.
- 83(b) election within 30 days of grant — required for most setups.

**Mega Backdoor Roth**:
- Available at companies with after-tax 401k + in-service rollover (Google, Meta, Amazon, etc.).
- Allows $40K+/year additional Roth contributions.
- Worth ~$8-15K/yr in lifetime tax savings; compounds enormously.

**Donor-advised fund (DAF)**:
- Donate appreciated public-company RSU shares to DAF → tax deduction at FMV + zero capital gains tax on sale.
- Best for high-tax-bracket employees with appreciated stock.

**State tax**:
- California state tax on RSU vest = up to 13.3%; combined with federal can hit 50%+ marginal.
- If you're moving to no-tax state (TX / FL / WA), defer RSU vest if possible.
- Trailing-state issues: some states tax equity earned while resident even if you've moved (NY notably aggressive).

**ISO + AMT trap**:
- Exercising ISOs in private company can trigger $50K-500K AMT bill on paper (since you don't sell the stock).
- Default: exercise small portions per year, calibrate to AMT crossover threshold.
- If company fails: AMT credit you can recover over future years, but real loss is the exercise cost.

**Post-IPO RSU strategy**:
- Default: sell all vested RSU immediately, diversify into index funds.
- Concentrated stock hold > 20% of net worth = gambling.
- 10b5-1 plan: pre-arranged scheduled sales; immune to insider-trading windows.
- Charitable / philanthropic strategies: DAF for appreciated shares.

## Phase 4 — Promo / refresh / band negotiation

Most TC growth post-hire comes from promotion + refresh, not annual raises.

**Promo math (typical FAANG path)**:
- IC4 → IC5: ~30-40% TC bump.
- IC5 → IC6 (Staff): ~30-40% TC bump.
- IC6 → IC7 (Sr Staff): ~25-35% TC bump.
- Director / Sr Director: ~30-50% bump.

**Refresh grants**:
- Annual refresh: typically 25-50% of new-hire annual vest, granted at year 1-2-3-4.
- Performance refresh: extra grant for "exceeds expectations" rating.
- Promo refresh: extra grant on level promotion (often 1.5-2× annual refresh).
- Retention refresh: extra grant for high performers at risk of leaving.

**Refresh negotiation**:
- Can be negotiated at offer time: "Confirm in writing that target annual refresh for L5 is X% of new-hire grant."
- Can be negotiated at promo: "My new level should come with a refresh in line with L6 standards."
- Can be negotiated at performance review: "Based on my 'exceeds' rating, what additional refresh is available?"

**Outside offer leverage** (for promo / counter-offer at current employer):
- An outside offer is legitimate leverage IF: (a) you have it in writing, (b) you'd actually take it, (c) you're prepared for current employer to call your bluff.
- Risks: getting branded "flight risk" (ironic but real). Use sparingly; once per 3-4 years.

**Band data (Levels.fyi)**:
- Use Levels.fyi data for level + company + region for negotiation.
- Adjust for stage of company (private discount), location (geo-adjustment), recent performance.

## Phase 5 — Departure / layoff / severance

Leaving (voluntarily or otherwise) is the most-overlooked equity moment. Get it right.

**Voluntary departure**:
- Final paycheck: confirm bonus / RSU vest cycle ends correctly.
- Equity: any in-flight vest? Some companies pro-rate; most don't.
- ISO/NSO exercise window: 90-day default; longer if negotiated.
- ISO exercise math: AMT consideration; sometimes can't afford to exercise (cost > affordability).
- Public company unvested RSU: forfeited entirely.
- Private company unvested RSU/options: forfeited; vested options exercise within window or lost.
- Non-compete: common in finance / specific senior roles. California: largely unenforceable; other states variable.
- Non-solicit: limit on poaching former colleagues; usually 12-24 months.

**Involuntary departure (layoff / termination)**:
- Severance: typically 2-3 months base + benefits + COBRA bridge for early-mid level. 6-12 months for senior. NEGOTIABLE.
- Equity acceleration: rare for IC; sometimes negotiable for senior roles.
- ISO exercise window: extended in some cases.
- COBRA: 18 months coverage at full premium cost.
- Negotiate: more severance, longer COBRA bridge, partial bonus, longer ISO exercise window, agreed-on reference language.

**Severance package negotiation (real money on table)**:
- Initial offer often "standard 2 months + COBRA." 
- Counter for: (a) more weeks (common +50%), (b) accelerated equity, (c) consulting agreement post-departure for 30-60 days at $X/day, (d) longer ISO exercise window.
- Get an employment lawyer if the package > $50K — they'll often pay for themselves.
- Don't sign separation agreement same day; ask for 7+ days to review (legally required for 40+ in many states).

**Acquisition exit (your company gets bought)**:
- Single-trigger acceleration: vested + accelerated upon acquisition. Rare.
- Double-trigger acceleration: vested + accelerated upon (acquisition + involuntary termination within 12 months). Standard at well-structured private companies.
- Cash-out vs roll-over: depends on deal terms. Typically partial cash + new equity at acquirer.
- Tax: part ordinary income, part capital gains. Plan with CPA before closing.

**IPO**:
- Lockup: 90-180 day post-IPO restriction on selling.
- 10b5-1 plan post-lockup: pre-scheduled sales (immune to blackout windows).
- Tax: ordinary income at vest; capital gains on appreciation.
- Concentrated-stock risk: most employees should diversify aggressively post-lockup.

## Phase 6 — When to stay vs leave

The "stay vs leave" decision is the highest-leverage compensation decision over a 5-10 year career.

**Stay signals**:
- Refresh grants are robust (>50% of new-hire annual vest).
- Promo trajectory is real (level bump within 18-24 months).
- Manager / team / project trajectory is positive.
- Company stock is appreciating > industry benchmark.
- Comp gap to outside offers is < 20%.

**Leave signals**:
- Comp gap to outside offers > 30%.
- Refresh culture has weakened (cost-cutting cycle, rare refreshes).
- Promo blocked structurally (band ceiling, manager, headcount).
- Stock is flat / declining > industry.
- Mission / role no longer fits.

**The 4-year arc** (typical):
- Year 1-2: build context + relationships + skill. Negotiate at hire is critical.
- Year 3-4: peak productivity; promo or refresh negotiation should land here.
- Year 4+: vesting cliff effect; comp drops 30-50% if no refresh / promo. Either renegotiate (with outside offer) or leave.

**Math: "leave with cliff comp" vs "stay for refresh"**:
- New offer adds new sign-on + new grant + clean slate.
- Stay grants you in-flight vest + refresh + tenure.
- Compute lifetime comp over next 4 years for each path. Often new offer wins by $200-500K over 4 years.

## Anti-patterns (don't do these)

1. **Accept first verbal**. Money on table, every time.
2. **Negotiate from emotion / FOMO**. Pause; come back with numbers.
3. **Ignore tax math**. Pre-tax comparisons mislead by 20-50%.
4. **Hold concentrated employer stock > 20% of net worth**. Bet on income + investment in same place.
5. **Skip 83(b) within 30-day window** on early-exercise ISOs. Costly mistake.
6. **Forget exercise window on departure**. 90 days passes fast; exercise costs can be huge.
7. **Compare TC across companies without illiquidity discount on private equity**. Apples to oranges.
8. **Believe "we don't negotiate"**. They negotiate; some candidates negotiate badly.
9. **Treat refresh as guaranteed**. Get target % in writing if possible.
10. **Sign separation agreement same day**. Take 7+ days; consult lawyer for senior packages.

## Diagnostic outputs (what you produce after a session)

For every coaching session, produce in this order:
1. **Offer evaluation summary**: TC by year + post-tax math + comparison to alternatives.
2. **Negotiation plan**: top 3 levers + script + target numbers + walk-away.
3. **Tax-aware action items** (83(b), ISO exercise plan, RSU sale strategy).
4. **Specific risks** (illiquidity, dilution, refresh dependency, concentration).
5. **Anti-pattern flags** (1-3 traps THIS person is closest to falling into).
6. **30/60/90 day plan**: what to negotiate now, what to monitor, when to revisit.
7. **Single biggest action for the next 14 days**. ONE thing.

If they push back ("recruiter said it's their top offer"): re-run the diagnostic. "Top offer" is a script. Coaching is pressure on the negotiation, not affirmation of acceptance.

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