September 2022: Newly revised!

Make sure your equity generates wealth, not a shocking tax bill.

Stock options, RSUs, job offers, and taxes—a detailed reference, including hundreds of resources, explained from the ground up, for employees and managers.

  • The entire online book
  • 364+links and references
  • Digital access to this title in the Holloway Reader
  • Downloadable PDF and EPUB for personal offline use
  • Newly updated for 2022!
Length: 80 pages
Edition: e2.1.1
Last Updated: 2022-09-12
Language: English
This is the first thing I share when someone is thinking about their equity compensation.Ryley Reynolds(Thrive Capital)

Table of Contents

Who May Find This Useful
A Note on Fairness
How This Guide Is Organized
When to Turn Elsewhere
Seeking Professional Advice
Equity Compensation Basics
Growth and Risk
Compensation and Equity
The Goals of Equity Compensation
Fundamentals of Stock Corporations
Stock and Shares
Public and Private Companies
Sales and Liquidity
Startups and Growth
Fundraising, Growth, and Dilution
Dilution Illustrations
Stages of a Startup
The Option Pool
Counting Shares
Classes of Stock
How Equity Is Granted
Restricted Stock Awards
Stock Options
Vesting and Cliffs
How Options Expire
Kinds of Stock Options
Early Exercise
Restricted Stock Units
Using Promissory Notes to Buy Stock
Less Common Types of Equity
Tax Basics
Kinds of Income
Federal Taxes
State Taxes
Taxes on Equity Compensation
83(b) Elections
409A Valuations
Taxes on ISOs and NSOs
The AMT Trap
Stock Awards vs. ISOs vs. NSOs
Taxes on RSUs
Tax Comparison Table
Tax Dangers
Plans and Scenarios
Evaluating Equity Compensation
What Is Private Stock Worth?
Can You Sell Private Stock?
Stock Option Scenarios
Summary of Dangers
Offers and Negotiations
Why Negotiation Matters
Equal Treatment
General Expectations
Offers From Startups
Questions Candidates Can Ask
Typical Employee Equity Levels
Typical Startup Advisor Equity Levels
Negotiation Tips
Offer and Negotiation Dangers
Documents and Agreements
Further Reading
General Resources
Considerations for Founders
Considerations for Candidates and Employees
Types of Equity Compensation
Vesting and Expiration of Stock Options
Forms and Tools
Please Help!
Holloway’s Guide to Equity Compensation is a comprehensive, authoritative resource for founders, managers, and employees. Decisions around equity compensation can be life-changing, and this Holloway Guide offers practical advice on everything from exercising stock options to tax implications to negotiating a job offer from a startup or stock corporation. I wish I’d had access to a resource like this earlier in my career.Leo Polovets(Susa Ventures)

Researched, written, and edited by experts.

Written by practitioners. Edited by professionals.

Original Authors
Joshua Levy (Holloway)
Joe Wallin (Carney Bradley Spellman)
Contributions and Review
José Ancer (Egan Nelson LLP)
Michael Brown (Fenwick & West)
George Grellas (Grellas Shah LLP)
Zach Holman
Chris McCann (Greylock Partners)
Leo Polovets (Susa Ventures)
Eric Tyson
Rachel JepsenEditor
Andy SparksEditor
Hope HackettResearch
Dmitriy Kharchenko & Leigh TaylorGraphics

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Fresh out of school as an early employee at Facebook, I didn’t understand all the intricacies of equity compensation. Later on, when I was VP of Operations overseeing recruiting at Dropbox, I realized a lot of folks also didn’t understand how equity packages worked. Understanding equity compensation, whether as an employee or a founder, is seriously complicated and also critical to get right. The Holloway Guide covers what you need to know.Ruchi Sanghvi(founder, South Park Commons)

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