Equity for Chiefs of Staff: Understanding Startup Equity

Takeaway: Evaluate startup equity from the instrument, ownership percentage, strike price, vesting, exercise window, and financing terms, then test the offer with a zero-value case.

Equity appears in some startup Chief of Staff packages. In the small, UK-heavy Chief of Staff Collective 2025 survey (n=63), 54% held equity. It can be meaningful upside. It can also be worth little or nothing. The outcome depends on the grant terms, company performance, financing structure, dilution, and liquidity. This guide covers the mechanics you need to evaluate an equity offer with clear eyes. None of it's tax or financial advice; for anything with real money on the line, talk to a professional.

The three things you might be offered

Startup equity comes in a few forms, and they behave differently.

Incentive Stock Options (ISOs) give you the right to buy company shares at a fixed price, called the strike price, at some point in the future. ISOs are available only to employees, and they can qualify for favorable tax treatment if you hold the shares at least two years from the grant date and at least one year after you exercise (IRC 422). Sell earlier and the disposition may cause some of the gain to be treated as ordinary income rather than receiving the intended ISO treatment (IRC 422). Exercising an ISO can also create an alternative minimum tax bill in the year you exercise, even though you haven't sold anything (IRS Topic 427), so the tax picture isn't automatically simple. Run the numbers with a tax professional before you exercise. They're a common form of grant for employees at private companies.

Non-Qualified Stock Options (NSOs) also give you the right to buy at a strike price, but without the special tax status of ISOs, and they can be granted to contractors and advisors, not just employees. With NSOs you generally owe ordinary income tax at exercise on the fair market value of the shares minus what you paid (IRS Topic 427). If your plan lets you exercise shares before they've vested, the timing works differently and a Section 83(b) election may be worth considering, which has a hard 30-day deadline from the transfer date (IRC 83(b)). That's a conversation to have with a tax professional, not a decision to make from a blog post.

Restricted Stock Units (RSUs) are a promise of actual shares, not the right to buy them, delivered when they settle. RSUs are more common at later-stage and public companies, and are taxed as ordinary income when they settle, based on the value at that time. At private companies RSUs often carry a double trigger, converting to shares only when both a time-based schedule and a liquidity event such as an acquisition or IPO are met, so they may not simply vest or become taxable on a set date. Options require the share value to exceed the exercise price before they have intrinsic value. An RSU delivers stock when its settlement conditions are met, so its value depends on the shares and the employee's ability to receive and eventually sell them.

Strike price and the 409A valuation

The practical questions

If you're granted options, one important number is the strike price, because it's what you will pay per share to exercise. That price is set by the board, using the company's most recent 409A valuation as support. A company may use an independent appraisal to support fair market value. Under the regulation, that method can receive a presumption of reasonableness when the appraisal is no more than 12 months old, applied reasonably, and not undermined by later information that materially affects value (26 CFR 1.409A-1).

Technical detail

An option whose exercise price can never be less than fair market value on the grant date generally sits outside Section 409A, provided the grant also meets the regulation's other conditions: the number of shares is fixed at grant, the option is taxed under Section 83, and it carries no feature that defers compensation beyond exercise. An option that doesn't qualify for the stock-right exclusion may be subject to Section 409A. If it violates those rules, the consequences can matter to the service provider: the income inclusion, a 20 percent additional tax, and premium interest all land on the person holding the option, not on the company (IRC 409A). That's why a stale or missing 409A is worth asking about.

Two implications matter for you. First, a lower strike creates more potential spread if the shares eventually sell above it. Grant timing can affect the price, but confirm the actual valuation and terms. Second, the 409A value isn't the same as the price investors pay. Investors often buy preferred stock, while employee awards commonly involve common stock. The rights and valuation of those securities can differ. When a recruiter quotes a headline value for your grant based on the last funding round's price, that headline number can overstate what your common shares are worth today.

Vesting and the one-year cliff

You don't get your equity all at once. It vests over time, and the most common schedule at startups is four years with a one-year cliff. That means you typically earn nothing if you leave in the first twelve months. At the one-year mark, 25 percent commonly vests in a single chunk, and the remainder vests in monthly or quarterly increments over the following three years (Holloway). Terms vary, so confirm the actual schedule in your grant documents.

The cliff matters in a role that depends closely on one principal. If either side ends the relationship before the cliff, the employee generally leaves without vested equity under that schedule, regardless of performance. That's not a reason to avoid the role. It's a reason to weigh the equity portion of an early offer realistically rather than as guaranteed compensation, and to pay attention to the relationship before you sign.

Why there is no reliable Chief of Staff grant benchmark

There's no robust, stage-adjusted public benchmark for Chief of Staff equity specifically. Grants vary by company stage, role scope, dilution, option type, and candidate leverage. The closest thing is self-reported: in the Chief of Staff Collective's 2025 survey, the 54 percent of respondents holding equity reported stakes typically between 0.3 and 1.2 percent. That's 63 people, most of them outside the US, answering about themselves, with no adjustment for stage or scope. Treat it as a sense of the spread, not a benchmark.

Published startup-equity tools can still provide scenario context. Index Ventures models VP grants around 0.3 to 0.8 percent of fully diluted equity at Series A and roughly 0.2 to 0.7 percent at Series B, with a full C-suite hire nearer 1 percent at Series A and B (Index Ventures). Those are a venture firm's employer-side planning scenarios, covering US and European startups, not Chief of Staff benchmarks. Holloway's guide illustrates the same pattern, equity dropping sharply with hire timing and funding stage, though that section was last updated in September 2022 and draws on older market data, so read it as directional (Holloway).

Don't automatically place a Chief of Staff at or below a generic VP band. "Chief of Staff" covers widely different mandates, company stages, and levels of responsibility, and no validated source maps those scopes cleanly onto VP grant data. Use generic ranges only to understand possible scenarios, then evaluate the actual grant from its ownership, economics, and terms.

The questions to ask before you sign

An equity number means little without context. Before you accept, ask the company:

• How many total fully diluted shares are outstanding, so you can turn your grant into an actual percentage rather than a raw share count?

• What percentage of the company would the grant represent on a fully diluted basis today?

• What is the current strike price and the date of the last 409A valuation?

• What was the price and post-money valuation of the most recent funding round?

• What is the vesting schedule and cliff?

• ISOs, NSOs, or RSUs?

• What is the post-termination exercise window, meaning how long you have to buy your vested options if you leave? Ask specifically about ISOs: to keep ISO tax treatment you generally have to exercise within three months of leaving, and after that the option is treated as a non-qualified option (IRC 422). A ninety-day window on an illiquid private company can mean writing a large check with no way to sell.

• How have recent financing rounds diluted employees, and does the company offer refresh grants?

• What does the liquidation-preference stack look like ahead of common shares, and do any investors hold participating preferred, so you can see who gets paid first in a sale?

• What happens to the grant if the company is acquired or your role ends after a change in control?

Ask for enough information to understand the award and record any material information the company won't provide. Some cap-table details are legitimately confidential, but a refusal to disclose your ownership percentage, strike price, vesting, or the actual grant documents is a material limitation you should weigh.

Keep it in perspective

Equity at a startup is speculative, illiquid upside, not a paycheck. A cautious way to evaluate an offer is to make sure the cash compensation works on its own and run a zero-value equity case. A grant that looks enormous on paper can be worth nothing if the company doesn't succeed, if liquidation preferences absorb the proceeds, if your strike price is high, or if you leave before the cliff. Understanding the mechanics helps you compare the company's description with the actual terms, even though no checklist can guarantee an eventual outcome.

Our Salary and Leveling Playbook includes an equity-math worksheet for working through an actual grant, alongside the leveling data and negotiation scripts.

Before you value a grant, our free offer evaluator checks the equity information you actually hold: share counts, strike price, the latest 409A and its date, vesting, and the exercise window.

FAQ

What is the difference between ISOs, NSOs, and RSUs? ISOs and NSOs are options, the right to buy shares at a set strike price; ISOs are employee-only and can carry favorable tax treatment if you hold the shares two years from grant and one year from exercise, though exercising them can trigger the alternative minimum tax, while NSOs can go to contractors and are taxed as ordinary income at exercise (Carta on the two option types, IRS Topic 427 on the tax treatment). RSUs are a different instrument: outright shares delivered at settlement, common at later-stage and public companies, and taxed as ordinary income when they settle.

What does a one-year cliff mean? On a standard four-year schedule with a one-year cliff, you typically earn no equity if you leave within the first twelve months. At one year, 25 percent commonly vests at once, and the rest vests gradually over the remaining three years. Confirm the exact terms in your grant (Holloway).

How much equity should a chief of staff get? There's no reliable CoS-specific benchmark. Generic VP figures from tools such as Index Ventures can illustrate scenarios, but they don't establish what a Chief of Staff should receive. Judge the actual grant from fully diluted ownership, strike and 409A information, funding terms, vesting, exercise window, dilution, liquidation preferences, and liquidity.

What is a strike price and why does it matter? The strike price is what you pay per share to exercise an option. The board approves it, commonly using the company's valuation of common stock as support. A lower strike creates more potential spread if the stock later sells above that price, but taxes, dilution, preferences, and liquidity still affect what you receive.

Is startup equity usually worth a lot? It can be worth a great deal or nothing. It's illiquid and can stay that way for years, and many companies never reach an exit that makes common shares valuable. Evaluate an offer as if the equity might be zero, make sure the cash works on its own, and treat the equity as upside rather than guaranteed pay.

For ongoing guidance on compensation and executive-operations careers, join The Brief. This article is educational and isn't tax, legal, or financial advice.