First-employee equity grants are normally limited to the 1-2% range (at most), as opposed to getting 10% and higher grants made to founders, for the following r

First-employee equity grants are normally limited to the 1-2% range (at most), as opposed to getting 10% and higher grants made to founders, for the following reasons: 1. First employees usually work for standard salary/benefits and therefore do not take anywhere near the level of risk taken by the founders. 2. First employees normally have no role in conceiving the core business model that, in a good startup, will be perhaps the most valuable asset available to the company. 3. First employees normally compete with many other potential employees who are ready to market their services to the company for salary/benefits, plus some modest equity compensation. 4. Once founders have reached the stage where they want to hire a first employee, they have usually gotten past the stage at which the risk level is at its highest (for example, here, someone obviously had to decide to pay you for a year's worth of consulting time, which likely was not cheap, when the prospects for getting any return on that investment were at their most speculative). Having said this, there is no magic formula in this area. To the extent that the above elements do not apply to your case, you can argue that you should get a larger grant in exchange for taking greater risk, for being indispensable, or whatever. In this type of scenario, you will likely get a restricted grant or an option grant. The former is immediately taxable, the latter is not. Both constitute equity grants and both will be subject to vesting. Thus, you will need to negotiate not only the size of any grant but also the associated protections for your position (how much to be immediately vested? what percent, if any, accelerates on any termination without cause? or on acquisition?, etc.). For a few basics on restricted stock, see http://grellas.com/faq_business_startup_006.html http://grellas.com/faq_business_startup_006.html. Hope this helps.