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Employee Equity Decoder

Decode your startup equity offer in plain English — options, vesting, 409A, risks & questions to ask HR.

Company

Job title

Base salary

Approx income band

Options / shares granted

Strike price $/sh

Grant type

Vesting years

Cliff (months)

State

Do you know the 409A?

Exercise window if you leave

Open ISO/AMT →Compare another offer →

Total equity grant

50,000 options

ISO · 4-yr / 12-mo cliff

Total exercise cost

$25,000

50,000 × $0.5000

Vested after 1 year

12,500

post-cliff

Cost to exercise vested (yr 1)

$6,250

Equity risk level

Medium

important gaps to clarify

Your equity in plain English

You received 50,000 stock options from Acme Inc. This means you have the right — but not the obligation — to buy 50,000 shares at $0.5000/share over the next 4 years (with a 12-month cliff). To buy all of them, you would need $25,000 in cash before any taxes.

These options only become valuable if the company's common shares are worth more than your strike, and you can eventually sell them. Private-company shares can stay illiquid for years — sometimes forever.

You haven't entered a 409A price, so we can't estimate paper spread or AMT. Ask your company for the most recent 409A per share — they have it.

Vesting timeline

Time	Vested options	Cost to exercise
Today	0	$0
After 1 year	12,500	$6,250
After 2 years	25,000	$12,500
After 3 years	37,500	$18,750
After 4 years	50,000	$25,000

Risk: Medium

•409A unknown — you can't estimate paper spread or AMT risk.
•90-day post-termination exercise window — common but harsh; you may need cash fast if you leave.

Questions to ask before signing

01Are these ISOs, NSOs, RSUs, or something else?
02What is my strike price?
03What is the current 409A price per share?
04When was the last 409A completed?
05What is my post-termination exercise window if I leave?
06What is the full vesting schedule (years, cliff, monthly/quarterly)?
07What happens to unvested options if the company is acquired (single vs double trigger)?
08What is the fully diluted share count today?
09What percentage of the company does my grant represent?
10Has the company raised SAFEs or convertible notes that could dilute me?
11Are there liquidation preferences (1x non-participating, multiple, participating)?
12How much has been raised in total, and at what valuations?

Important note

This tool is an educational estimate. It can help explain your equity offer, exercise cost, vesting, 409A, and possible tax warning signs. It does not guarantee what your equity will be worth. Private-company shares may never become liquid, and taxes depend on your personal situation. Speak with a tax advisor before exercising options.

AI explainer

Ask anything about your result

The math above is deterministic. AI explains what it means — it never recalculates the numbers.

About

You got a startup equity offer and the paperwork might as well be in another language. This tool decodes it in plain English: what you actually got, what it costs to exercise, how vesting works, what the 409A means, where the risks are, and the exact questions to ask HR before you sign.

How it works

01Enter only what's on your offer letter: shares, strike price, grant type (ISO/NSO/RSU), vesting, and state.
02If you know the current 409A price, add it — we'll show the paper spread and ISO/AMT warnings.
03We compute total exercise cost, vested-after-1-year, cost to exercise vested shares, and a Low/Medium/High risk score.
04We generate a plain-English explainer, a vesting timeline table, and a copy-pasteable list of questions to ask your company.

Examples

50,000 ISOs at $0.50 strike

Total exercise cost: $25,000. After 1-year cliff: 12,500 vested ($6,250 to exercise). If the 409A is $2.00, paper spread is $75,000 — and exercising all of them today could create a large AMT bill.

RSU grant, no strike

RSUs cost nothing to exercise — they convert to shares at vest and are taxed as ordinary W-2 income on the value at vest. Risk is lower upfront but you can't time the tax event.

FAQ

What's the difference between ISO, NSO, and RSU?+

ISO (Incentive Stock Option) and NSO (Non-qualified Stock Option) give you the right to buy shares at a strike price. ISOs get better tax treatment if you hold long enough but can trigger AMT. NSOs are taxed as ordinary income on the spread at exercise. RSUs are shares that just appear in your account at vest — no strike, no exercise, taxed as W-2 income at vest.

What is the 409A?+

It's an IRS-required fair-market-value appraisal of your company's common stock. Your option strike price is set at the 409A. If the 409A rises after your grant, the difference between strike and 409A is your 'paper spread' — and may create AMT if you exercise ISOs.

Should I exercise early?+

Maybe. Early exercise + 83(b) starts the long-term capital gains and QSBS clocks early, which can save huge tax later. But you spend real cash on shares that may be worth zero. Only consider it if exercise cost is small relative to your savings.

What's a post-termination exercise window?+

When you leave, you usually have 90 days to exercise your vested ISOs or they expire worthless. Some progressive companies extend this to 7–10 years. This is one of the most important — and most quietly hidden — terms in your offer.

Why does the company say my equity is worth $X but you say it's risky?+

Companies often quote equity value based on the latest preferred round price × your shares. That number ignores liquidation preferences (investors paid first), future dilution, the chance the company never exits, and the cash you need to actually buy the shares. Real expected value is almost always much lower.