How Much Equity Should You Give a VP or C-Level Hire?

You’re about to make an offer to your first VP.

Salary? 

Sorted. 

You’ve benchmarked £90K-£120K.

But then they ask:

“What’s the equity?”

You freeze.

Too little → They walk.
Too much → You’ve given away the company.

You Google “how much equity for VP” and get wildly conflicting advice:

• YC says: “0.5-1% for VPs”
• Other founders say: “We gave 3-5%”
• Your advisor says: “It depends”

Nobody gives you a clear framework.

So let me.

I’ve helped 200+ scaling companies structure equity offers for VPs and C-level hires over 20 years.

Some gave away too much and regretted it later (when they needed equity for future hires).

Others gave too little and watched great candidates walk away.

Here’s exactly how much equity to give VPs and C-level hires – with benchmarks for different stages, roles, and situations.

THE BRUTAL TRUTH ABOUT EQUITY

Before we get into numbers, let’s be honest about something:

Equity is the most expensive currency you have.

When you give someone 2% equity, you’re not just giving them “2% of the current company”.

You’re giving them 2% of everything – future revenue, exit value, voting rights, decision-making power.

Let me show you the math:

THE REAL COST OF EQUITY

Scenario:

You’re at £500K ARR. You hire a VP Sales at £100K salary + 2% equity.

Fast-forward 5 years:

Your company exits at £50M.

That 2% equity? Worth £1,000,000.

You paid them:

• Cash: £500K over 5 years (£100K x 5)
• Equity: £1M at exit

Total compensation: £1.5M

For £100K salary, they got £1.5M total value.

That 2% equity wasn’t “just 2%”.

It was £1M.

Now imagine you gave 5% instead of 2%.

Same exit (£50M).

5% equity = £2.5M at exit.

Total compensation: £3M (£500K salary + £2.5M equity)

You just paid them 3X more than you needed to.

THE EQUITY BUDGET PRINCIPLE

Here’s the framework I use:

You have approx. 20-30% equity budget for all employees (excluding founders).

That 20-30% needs to cover:

• Your first VP (1-2%)
• Your second VP (1-2%)
• Your third VP (0.5-1.5%)
• 10-20 senior employees (0.1-0.5% each)
• 30-50 mid-level employees (0.01-0.1% each)

If you give your first VP 5%, you’ve used up 25% of your equity budget on one person.

That’s a problem.

HOW MUCH EQUITY TO GIVE (BY ROLE AND STAGE)

Here are the industry benchmarks:

VP-LEVEL ROLES (VP Sales, VP Product, VP Marketing, VP Eng)

At Pre-Seed / Seed Stage (£0-£500K ARR, 5-15 employees):

• Equity range: 0.5-2%
• Typical: 1-1.5%
• When to give more (2%): If they’re joining very early (employee #3-5) and taking significant risk
• When to give less (0.5-1%): If you’re at £300K-£500K ARR (less risk, more proven)

At Series A Stage (£500K-£3M ARR, 15-50 employees):

• Equity range: 0.5-1.5%
• Typical: 0.75-1%
• When to give more (1-1.5%): If they’re critical to next growth stage (VP Sales when you’re scaling revenue)
• When to give less (0.5-0.75%): If you’re at £2M-£3M ARR (lower risk, company is more proven)

At Series B+ Stage (£3M-£20M+ ARR, 50-200+ employees):

• Equity range: 0.25-1%
• Typical: 0.5-0.75%
• When to give more (1%): For business-critical roles (CTO at a product-led company)
• When to give less (0.25-0.5%): For non-core roles (VP Operations, VP HR)

C-LEVEL ROLES (CFO, CMO, COO)

At Pre-Seed / Seed Stage (£0-£500K ARR, 5-15 employees):

• Equity range: 1-3%
• Typical: 1.5-2%
• When to give more (2-3%): If they’re joining as co-founder-level (employee #2-3)
• When to give less (1-1.5%): If you’re at £300K-£500K ARR

At Series A Stage (£500K-£3M ARR, 15-50 employees):

• Equity range: 0.75-2%
• Typical: 1-1.5%

At Series B+ Stage (£3M-£20M+ ARR, 50-200+ employees):

• Equity range: 0.5-1.5%
• Typical: 0.75-1%

CTO / VP ENGINEERING (SPECIAL CASE)

CTOs typically get more equity than other VPs because:

• They’re often joining earlier (higher risk)
• Technical leadership is mission-critical for tech companies
• Harder to replace (specialised skills)

At Pre-Seed / Seed Stage (£0-£500K ARR, 5-15 employees):

• Equity range: 2-5%
• Typical: 3-4%
• When to give more (4-5%): If they’re employee #1-3, building everything from scratch
• When to give less (2-3%): If you’re at £300K-£500K ARR with existing product

At Series A Stage (£500K-£3M ARR, 15-50 employees):

• Equity range: 1-3%
• Typical: 1.5-2%

At Series B+ Stage (£3M-£20M+ ARR, 50-200+ employees):

• Equity range: 0.5-2%
• Typical: 1-1.5%

THE EQUITY NEGOTIATION FRAMEWORK

Here’s how to actually structure the conversation:

STEP 1: Start With Benchmarks (But Don’t Share Them Immediately)

When they ask “What’s the equity?”, don’t say:

❌ “We’re thinking 1%.”

Instead, say:

✅ “Let’s talk about the total compensation package. I want to make sure it’s competitive and fair. What equity range were you expecting?”

Why this works:

You let them anchor first.

If they say “0.5-1%”, you’re aligned (and you can offer 0.75-1%).

If they say “3-5%”, you know there’s a mismatch and you need to explain your equity philosophy.

STEP 2: Explain Your Equity Philosophy

If they’re asking for more than your range (e.g., they want 3% but you’re offering 1%), explain WHY.

Example:

“I totally understand you’re looking for 3%. Here’s how we’re thinking about equity:

We’re at £1M ARR. We’ve got 25 employees. We’re planning to scale to 100+ employees over the next 3-5 years.

Our equity budget for all employees (excluding founders) is about 20-25%.

That needs to cover: – 5-7 VP-level hires (you’re our 2nd VP) – 20-30 senior employees – 50-70 mid-level employees

If we give you 3%, we’ve used up 12% of our equity budget on one person.

That doesn’t leave enough for future VPs and senior hires we’ll need to scale.

So we’re offering 1% with aggressive vesting over 4 years.

If you help us grow 3-5X, that 1% will be worth significantly more than 3% of today’s company.”

Why this works:

You’re not saying “no”. You’re explaining the trade-off.

You’re positioning it as fairness to future hires (not cheapness).

And you’re emphasising growth potential (1% of a £50M company is better than 3% of a £10M company).

STEP 3: Offer Tiered Equity Based On Performance

If they’re still pushing for more equity, consider performance-based equity grants.

Example:

“Here’s what I can do:

– Base equity: 1% (vests over 4 years) 

– Performance equity: Additional 0.5% if you hit these milestones in Year 1: 

– Milestone 1: Scale ARR from £1M to £2M (0.25% granted) 

– Milestone 2: Build and manage a team of 5-8 sales reps (0.25% granted)

So your total potential equity is 1.5%, but you earn the extra 0.5% by delivering results.”

Why this works:

They get more equity if they perform (aligned incentives).

You protect yourself from over-paying if they don’t perform.

You demonstrate that you’re willing to reward results (not just showing up).

STEP 4: Be Transparent About Dilution

Great candidates understand dilution.

If you’ve raised (or plan to raise) venture capital, equity gets diluted with each round.

Be honest about it:

“Right now, 1% of the company means 1% of the current equity.

But we’re planning to raise Series A in the next 12-18 months. That will dilute everyone (including me as founder) by 15-20%.

So your 1% will become ~0.8% after dilution.

But if we grow 5-10X in value, your 0.8% of a much bigger company will be worth way more than 1% today.”

Why this works:

You’re managing expectations early (not surprising them later).

You’re showing them the upside (growth in company value offsets dilution).

Transparency builds trust (they respect that you’re being straight with them).

HOW TO STRUCTURE VESTING

Equity without vesting is a disaster.

Here’s why:

Scenario:

You give a VP 2% equity with no vesting.

They quit after 6 months.

They walk away with 2% of your company.

You’ve lost 2% equity and got 6 months of work.

Terrible deal.

THE STANDARD VESTING STRUCTURE

4-year vesting with 1-year cliff

What this means:

• 4-year vesting: They earn equity gradually over 4 years (e.g., 1%/year or ~0.08%/month)
• 1-year cliff: They earn NOTHING if they leave before 12 months. At 12 months, they get the first 25% (1 year of vesting). After that, they vest monthly.

Example:

You give a VP 2% equity with 4-year vesting + 1-year cliff.

If they leave at:

• 6 months: They get 0% (left before cliff)
• 12 months: They get 0.5% (25% of 2% = 0.5%)
• 24 months: They get 1% (50% of 2%)
• 48 months (4 years): They get the full 2%

Why this works:

• Protects you if they leave early (you don’t lose 2% for 6 months of work)
• Incentivises them to stay (they vest more equity the longer they stay)
• Industry standard (so it won’t seem unusual to them)

ACCELERATION CLAUSES (SHOULD YOU INCLUDE THEM?)

Some candidates ask for:

Single-trigger acceleration: If the company is acquired, all unvested equity vests immediately.

Double-trigger acceleration: If the company is acquired AND they’re fired/made redundant within 12 months, all unvested equity vests immediately.

My recommendation:

❌ Don’t give single-trigger acceleration.

Why? 

• If you’re acquired and their equity fully vests immediately, they have zero incentive to stay. 
• The acquirer needs them to stay and help integrate. 
• If they leave immediately post-acquisition, it can derail the deal.

✅ Consider double-trigger acceleration for C-level roles only.

Why? 

If you’re acquired and the acquirer fires your CFO/CTO/CMO, they should get their equity. 

It’s fair. 

But limit this to true C-level roles (not every VP).

EQUITY VS. CASH: THE TRADE-OFF

Here’s a common situation:

A great VP candidate wants £120K salary.

You can only afford £100K cash.

Can you offer more equity instead?

Short answer: Yes, but be careful.

THE EQUITY-FOR-CASH TRADE-OFF FORMULA

Industry rule of thumb:

£1 in salary = £3-5 in equity value (at current valuation)

Example:

Candidate wants £120K salary.

You can pay £100K cash.

Gap: £20K/year

To make up £20K salary with equity:

£20K salary = £60K-£100K in equity value

If your company is valued at £5M:

£60K-£100K equity value = 1.2-2% equity

So you’d offer:

• Option A: £120K salary + 0.5% equity
• Option B: £100K salary + 1.5-2% equity

Let them choose.

WHEN THIS WORKS

✅ Early-stage companies (£0-£1M ARR): Candidates expect lower cash, higher equity
✅ Candidates who believe in your growth: They value the equity upside
✅ When your valuation is reasonable: If you’re valued at £50M with £500K ARR, your equity is overvalued. Candidates won’t take the trade.

WHEN THIS DOESN’T WORK

❌ Later-stage companies (£5M+ ARR): Candidates expect competitive cash AND equity
❌ Candidates with financial obligations: Mortgage, kids, etc. – they need cash now, not equity later
❌ When your valuation is inflated: If you raised at a £20M valuation with £200K ARR, offering more equity doesn’t help (it’s worth less than you think)

EQUITY MISTAKES MOST FOUNDERS MAKE

MISTAKE #1: Giving Away Too Much Equity Early

What happens:

You give your first VP 5% because you’re desperate to hire someone great.

Fast-forward 18 months: You need to hire 3 more VPs. You don’t have enough equity left.

You either:

• Offer less equity (new VPs feel undervalued)
• Dilute existing employees (team morale drops)

Fix:

Think long-term. 

Your first VP shouldn’t get dramatically more equity than your 2nd, 3rd, and 4th VPs.

MISTAKE #2: Not Using Vesting

What happens:

You give 2% equity with no vesting. VP leaves after 6 months. You’ve lost 2% equity.

Fix:

Always use 4-year vesting with a 1-year cliff. No exceptions.

MISTAKE #3: Using Equity To Compensate For Low Salary

What happens:

You pay a VP £60K salary (way below market) and compensate with 3% equity.

The VP accepts because they need a job.

6 months in, they realise they can’t pay rent. They leave.

Fix:

Pay competitive cash (at least 80-90% of market rate). Use equity as upside, not a salary replacement.

MISTAKE #4: Not Explaining Dilution

What happens:

You offer 2% equity. Candidate accepts.

12 months later, you raise Series A. Their 2% becomes 1.6% (20% dilution).

They feel cheated. Morale drops.

Fix:

Explain dilution upfront. Manage expectations about future fundraising and how it impacts equity %.

MISTAKE #5: Treating All VPs The Same

What happens:

You give VP Sales, VP Product, and VP Marketing the same equity (1% each).

But VP Sales is business-critical (if sales fail, you fail). VP Marketing is nice-to-have.

VP Sales feels undervalued.

Fix:

Differentiate equity based on:

• Role criticality: Core roles (CTO, VP Sales) get more than support roles (VP Operations)
• When they join: Earlier hires get more (higher risk)
• Impact potential: Roles that directly drive revenue get more

THE EQUITY OFFER CHECKLIST

Use this checklist when structuring equity offers:

BENCHMARKING

☐ You’ve researched industry benchmarks for this role + your stage
☐ You’ve considered your equity budget (20-30% for all employees)
☐ You’ve thought about future hires (will you need 3-5 more VPs?)

STRUCTURING

☐ You’ve decided on equity %:

• Pre-Seed/Seed: 1-2% for VPs, 2-4% for CTO/C-level
• Series A: 0.75-1.5% for VPs, 1-2% for CTO/C-level
• Series B+: 0.5-1% for VPs, 0.75-1.5% for CTO/C-level

☐ You’ve set up vesting: 4-year vesting with 1-year cliff
☐ You’ve decided on acceleration: Double-trigger only (and only for C-level)

NEGOTIATION

☐ You’ve prepared to explain your equity philosophy
☐ You’ve decided if you’ll offer performance-based equity
☐ You’ve calculated equity-for-cash trade-off (if they want more cash than you can pay)
☐ You’ve explained dilution (if you plan to raise VC)

REAL EXAMPLES: WHAT WORKED (AND WHAT DIDN’T)

EXAMPLE 1: THE EQUITY MISTAKE

Founder: Sarah, £400K ARR, 12 employees

Situation:
Sarah hired a VP Sales. She was desperate. She offered 5% equity (way above benchmark).

What happened:
VP Sales left after 18 months (took 2.25% vested equity).

Sarah tried to hire VP Product. She could only offer 0.75% (equity budget was tight).

VP Product candidate said: “Your VP Sales got 5%. I’m being offered 0.75%? That doesn’t seem fair.”

Sarah lost the candidate.

Lesson: Don’t over-pay equity early. It constrains future hires.

EXAMPLE 2: THE EQUITY WIN

Founder: James, £800K ARR, 18 employees

Situation:
James hired a VP Product. He offered 1.2% equity with 4-year vesting + 1-year cliff.

He also offered performance equity:

• Additional 0.3% if they hit product milestones in Year 1
• Additional 0.5% if they stayed 4 years and company grew 5X

What happened:
VP Product crushed it. Hit all Year 1 milestones. Stayed 4 years.

Total equity earned: 2% (1.2% base + 0.3% Year 1 + 0.5% growth bonus)

Company exited at £40M. VP Product’s 2% = £800K.

VP felt rewarded. James felt it was fair.

Lesson: Performance-based equity aligns incentives and rewards results.

READY TO MAKE YOUR VP EQUITY OFFER?

I’ve helped 200+ scaling companies structure equity offers for VPs and C-level hires.

The difference between a great equity offer and a regrettable one?

Fair benchmarking + smart vesting + transparent communication.

If you’re about to make an offer to a VP or C-level hire and you’re not sure how much equity to give, here’s how I can help:

OPTION 1: Download The Free Senior Leadership Hiring Guide

Inside, you’ll get:

✅ VP equity benchmarking table (by role, stage, and company size)
✅ Vesting structure templates (4-year vesting + cliff, acceleration clauses)
✅ Equity negotiation scripts (how to explain your equity philosophy)
✅ Equity-for-cash trade-off calculator (when they want more salary than you can pay)

OPTION 2: Book A 45-Minute Equity Strategy Call

Not sure how much equity to offer? Wondering if your offer is competitive?

Let’s talk through:

• Whether your equity offer is fair (benchmarked against industry standards)
• How to structure vesting (and whether to include performance-based grants)
• How to negotiate if they’re asking for more equity than you want to give

No pressure. No sales pitch. Just practical advice.

THE BOTTOM LINE

Equity is the most expensive currency you have as a founder.

• Give too little → Great candidates walk away.
• Give too much → You run out of equity for future hires.

The benchmarks:

• VPs: 0.5-2% (depending on stage and role)
• C-level: 1-3% (depending on stage and role)
• CTO: 2-5% early-stage, 1-3% growth-stage

Always use 4-year vesting with a 1-year cliff.

Always explain your equity philosophy (don’t just throw out a number).

Always think long-term (your first VP shouldn’t use up 25% of your equity budget).

Ready to structure your VP equity offer?

Download the Leadership Hiring Guide and let’s make sure your offer is competitive, fair, and protects your equity budget for future hires.