Our top candidate wants equity. How much is reasonable?

The equity question usually arrives later than it should

The team finds the executive. The interviews go well. Everyone starts using phrases like “perfect fit,” which is usually when hiring discipline packs a small bag and leaves the building. Then the candidate asks about equity.

Leadership responds with a share count. The candidate asks what percentage that represents. Someone says the company cannot disclose the cap table. Finance joins the conversation. Legal appears. Three days pass. The candidate begins wondering whether the upside is real or whether the company handed them 40,000 decorative numbers.

Equity does not need to be simple. It does need to be explainable. A candidate cannot make an informed career decision if the value proposition depends on information nobody will discuss.

The goal is not to make the equity sound enormous. It is to make the tradeoff clear enough that both sides know what they are betting on.

There is no universal executive equity percentage

A founder hiring the first commercial executive at an early-stage company is solving a different problem from a mature private company adding a divisional vice president. A public company grant is not evaluated like startup options. A turnaround leader taking company risk is not making the same move as an executive joining a stable business at market cash.

The title alone cannot set the grant. Start with the mandate: What must this person build, change, protect, or grow? What decisions will they own? What value could they create? How difficult is that experience to find? How much of the company's outcome will reasonably sit on their judgment?

Then price the risk. Is the role clearly defined? Is the business funded? Is the executive leaving stable cash, near-term vesting, a known team, or a valuable reputation behind? Is the company asking the person to accept less cash because “the upside could be huge” while declining to explain the upside?

That last version is not an equity strategy. It is optimism with a vesting schedule.

Use six decisions to build the offer

Do this work before the finalist asks. Offer-stage improvisation is expensive, particularly when every additional approval teaches the candidate that leadership has not agreed on what the role is worth.

Explain what the candidate actually owns

A large share count can sound impressive while communicating almost nothing. Candidates need the type of security, the number of shares or units, and the approximate fully diluted ownership percentage. They also need to know what assumptions sit underneath any example value.

You do not need to promise an outcome. Separate facts, current estimates, and future possibilities. “Here is what the grant represents today, how it vests, and what could change the value” builds more trust than presenting a best-case exit as if the money has already cleared.

Equity can offset cash, but it cannot impersonate it

A candidate may willingly trade cash for ownership. The trade can make sense when the grant is meaningful, the terms are clear, the company's prospects are credible, and the executive can financially absorb the risk. The person may also value the influence and satisfaction of helping build the business.

But equity is uncertain and illiquid until it is not. Do not add a hypothetical future value to a lower base and announce that the candidate is receiving above-market compensation. Compare guaranteed cash with guaranteed cash. Discuss equity as potential upside with its specific risks and conditions.

If the company cannot move on base, ask which other levers matter: a larger grant, a review tied to defined milestones, a sign-on payment, make-whole support, severance, flexibility, clearer authority, or resources that improve the odds of success.

Use the companion guide on why strong executive candidates want more than the approved budget when the same compensation gap keeps appearing across credible finalists.

Do not wait until the written offer to explain the mechanics

Equity conversations should begin early enough to identify a mismatch without negotiating a final grant during the first call. Ask what the candidate currently receives, what they may forfeit, how they evaluate ownership, which terms matter, and what level of cash risk they can realistically take.

Before the written offer, walk through the full package and leave room for questions. The candidate should have access to the plan documents and enough information to consult their own legal, financial, and tax advisors. Your recruiting partner can translate the decision and surface concerns. They should not cosplay as securities counsel.

Clarity also protects the company. An executive who joins believing the grant means something different will not become happier after onboarding.

Know what the candidate is leaving behind

Senior candidates may be walking away from unvested equity, a near-term bonus, deferred compensation, or a likely liquidity event. “They have not earned it yet” is technically comforting and strategically incomplete. The candidate is still pricing the value they believe they may lose by moving now.

Separate vested value from unvested potential, near-term certainty from long-range possibility, and documented awards from assumptions. Then decide whether to replace any portion with cash, a make-whole grant, adjusted vesting, or another structure your advisors support.

You do not need to reimburse every imagined future dollar. You do need to understand why a rational person may not leave it for a vague promise and a company hoodie.

Do not create an internal problem to close an external one

The final package must be explainable against leadership peers, future hires, dilution, and the value of the role. Internal equity matters. So does the external market. When those two disagree, declaring the market unreasonable does not make the candidate cheaper.

You may need to recalibrate the job, improve the cash and equity mix, hire at a different level, or address broader compensation compression. If one candidate wants an outlier package, evaluate the evidence. If every credible candidate raises the same concern, the market has submitted feedback in bold.

When a competing or current-employer offer enters the conversation, use the candidate counteroffer framework before changing the package out of panic.

What I help companies figure out

I have spent more than 20 years recruiting inside companies including Google, Meta, and TKO and advising hiring leaders across different stages and industries. The equity question is rarely only about a percentage. It is usually where role clarity, company risk, market reality, candidate motivation, and leadership alignment all arrive for the same meeting.

I help companies calibrate the executive mandate, gather market feedback, understand what the candidate is comparing, identify offer risk early, and build a total proposition that can survive serious questions. Your legal, tax, finance, and compensation advisors should structure and approve the actual grant. I make sure the hiring strategy reaches them before the finalist is halfway out the door.

Bring me the mandate, cash range, equity framework, stage, candidate's current situation, and the value this hire must create. I will tell you where the offer is credible and where it is hoping enthusiasm does the math.