Deciding whether to offer equity compensation – and how to structure it – is one of the harder calls founders and Reward teams face.
The variables are significant.
Which vehicle is right for your company? Who should receive equity, and how much? What's the right balance between cash and equity in an offer? And how do you design something that actually motivates employees rather than confusing them?
There's no shortage of opinions, either – every company has a slightly different way of approaching equity compensation, which makes it much harder to get a gauge on what ‘competitive equity’ actually looks like.
This guide is here to help you cut through that.
It covers how to structure an equity compensation plan for startup employees, what the most common vehicles are and how they work, and what Ravio's benchmark data shows about how other European tech companies approach equity.
Equity compensation is a form of non-cash incentive that grants employees an ownership stake in the company they work for, in return for their work and contributions.
A common analogy is to imagine equity in a company as a cake or pie. The pie represents the whole company, with slices cut out of the pie as equity or ownership in the company is given to founders, investors, employees, or other stakeholders.
The central premise of employee equity is that it acts as a long-term incentive to motivate and reward performance.
If employees help the company achieve its goals, then the company increases its revenue and the equity the employee owns becomes more valuable – until eventually a liquidity event (IPO, M&A, secondary share sale) allows the employee to sell their equity and convert it into cash.
Understanding the different vehicles for equity is vital when designing an employee equity plan, impacting the financial potential of the equity, when employees can access that potential, what conditions apply, and how it's taxed – for both the company and the employee.
The most common types used in Europe are:
Stock options give an employee the right to buy company shares at a fixed price – the strike price – at a future date. If the company's value increases, the employee can buy shares at the lower strike price and sell at the higher market price, pocketing the difference.
Most startups opt for tax-advantaged stock option schemes where they exist, because the tax treatment for both employer and employee is significantly better.
In the UK, for instance, the Enterprise Management Incentive (EMI) scheme are the most widely used: employers pay no tax at exercise and may qualify for corporation tax deductions, while employees pay no income tax at exercise and benefit from reduced capital gains tax rates under Business Asset Disposal Relief (BADR).
EMI is only available to companies with fewer than 250 employees, though. For larger companies, non-tax-advantaged options are still possible but less favourable – the employer pays national insurance at exercise, and the employee pays income tax on the gain at exercise plus capital gains tax on any further increase at sale.
Other European equivalents include the Bon de Souscription de Parts de Créateur d'Entreprise (BSPCE) in France and the Key Employee Engagement Programme (KEEP) in Ireland., both designed to make early-stage equity more accessible to employees.
RSUs grant employees actual shares in the company, subject to a vesting schedule.
Unlike options, there's no strike price – the employee simply receives shares once they've vested, and makes money if those shares have increased in value by the time they sell.
RSUs are more common in larger, later-stage companies and public companies, where the share price is more established and the value of a grant is easier for employees to understand.
Tax applies at vesting rather than exercise. In the UK, for instance, the employer pays national insurance when shares vest; the employee pays income tax on the fair market value of the shares at vesting, and capital gains tax on any further gain at sale.
Some tax-advantaged schemes exist for RSUs – Share Incentive Plans (SIPs) and Save As You Earn (SAYE) in the UK, for example – though both typically require employees to invest their own money upfront, which limits their appeal.
Growth shares (also known as hurdle shares) are a separate class of shares that only become valuable above a set valuation threshold – the ‘hurdle’.
Employees receive shares now, but only participate in company value created above that threshold. So, for example, if the company's current value is £10m and the hurdle is set at £12m, employees only start to benefit once the business is worth more than £12m.
Because employees buy shares at their current market value (which is low, given the hurdle), there's typically no income tax at grant. Any gain above the hurdle on exit is taxed as capital gains rather than income – a more favourable rate in most jurisdictions.
This makes growth shares sometimes attractive for more mature companies that want to offer meaningful equity to senior hires without creating a large upfront tax liability for either party.
Phantom shares – also known as virtual shares or Virtual Stock Option Plans (VSOPs) in some markets – give employees the economic benefit of equity without any actual share ownership.
Employees receive a cash payout equivalent to the value of a notional shareholding at a liquidity event, minus a nominal strike price.
The appeal for companies is simplicity: no cap table changes, no shareholder rights to manage, no share transfers.
For employees in jurisdictions with fewer tax-advantaged share schemes, VSOPs are a practical way to participate in company upside. For instance, VSOPs are widely used in Germany, where the tax and legal environment has historically made issuing real shares to employees more complex.
The trade-off is tax treatment – payouts are typically taxed as income rather than capital gains, which is less favourable.
MIPs are most commonly used in private equity-backed companies to align the interests of senior management with those of PE investors.
They typically allocate 10-20% of equity to a management pool, structured through direct equity co-investment (sometimes called sweet equity), share options, or ratchet mechanisms tied to exit returns.
The defining feature is that returns are conditional on investors achieving their own return hurdles first. This means MIPs can deliver significant upside for management teams on a successful exit – but if the PE firm's return threshold isn't met, the management stake may be worth little or nothing.
MIPs are usually reserved for senior leadership rather than the broader employee population.
Co-investment schemes require employees to put in their own capital alongside the company – essentially investing personal funds into the business in exchange for equity.
This creates strong alignment, because the employee has real financial exposure rather than just an option on future value.
Co-investment is more common at senior levels, particularly in financial services and PE-backed businesses.
The upside can be significant, but so is the risk: if the company underperforms, employees lose their own money. Tax treatment varies by structure and jurisdiction.
Issuing ordinary shares means giving employees direct equity ownership in the company, with the same class of shares typically held by founders and investors. Employees become shareholders immediately, with voting rights and entitlement to dividends.
In practice, ordinary shares are rare as an equity compensation vehicle for most employees.
They're administratively complex, create immediate tax obligations based on the shares' fair market value at grant, and bring shareholder rights that can complicate future funding rounds.
Where they do appear, it's usually in very early-stage companies – often for founding team members – or as part of a management buyout structure.
It’s common for startups to dedicate an option pool to employees – equity is an important lever for competitive total compensation, because startups are typically more cash poor than larger businesses and so unable to compete for top talent on base salary alone.
Granting employees equity adds no payroll costs in the short-term, and gives employees the opportunity for a significant upside potential – if the startup is successful, the equity that early employees receive could be worth a lot more over time.
However, there are pros and cons to offering equity compensation, both for employer and employee.
The benefits of employee equity plans centre around the ability to compete when hiring top talent and retain that talent for the long-term, whilst keeping payroll costs down.
Here’s the key reasons that companies choose to offer equity compensation to employees:
Whilst many companies choose to offer equity compensation to employees for the reasons outlined above, there are some downsides.
For employees, the main risks are:
Because of this complexity and risk, some job candidates will always favour cash compensation over equity, so if you’re trying to balance a lower salary offer with equity compensation, you may lose some candidates along the way.
And for company founders and leaders there are risks to releasing startup equity to employees too:
Once you've decided you're going to offer equity to employees, how do you actually build a plan?
There are a lot of decisions to make and, as with most things in compensation, there's no single right answer – it depends on where your company is in its journey and what you're trying to achieve.
But there is a logical sequence to working through it to ensure a structured approach for fair and consistent decisions.
Before any decisions about vehicles, grant amounts, or eligibility, the starting point is your compensation philosophy – specifically, how does equity fit alongside your broader values as a company in terms of rewarding employees?
As Figen Zaim, founder of Olivier Reward Consulting, explains: "It always starts with the philosophy.”
“What are we trying to achieve with compensation? Are we aiming to open the floodgates for everyone, or are we aiming to incentivise senior leadership and key talent?"
For some companies, for instance, equity is fundamentally about ownership – the belief that everyone building the company should have a stake in it. In this case, broad eligibility is a given, and equity is granted to all employees as a reflection of shared purpose.
For others, equity is primarily a performance and retention lever – reserved for roles or individuals where long-term incentivisation matters most, with grant sizes tied to impact and seniority, and ongoing refreshers a vital element of equity plan design.
For cash-poor early-stage startups, equity often fills a specific financial gap – it's the primary lever for competing for talent when base salaries can't match the market, with the implicit promise of future upside in exchange for accepting less cash now.
And for some companies, equity is one component within a deliberately market-leading total package – think Netflix's approach of paying top-of-market cash salaries and offering equity on top, rather than using equity to offset a lower base.
These are all valid approaches to employee equity, but they come with different rationale, which impacts your approach.
Some companies offer equity to all employees. Others limit it to certain roles, levels, or functions. Both approaches exist in the market – but the decision should be intentional, not default.
For market context, Ravio's 2026 Compensation Trends data shows most European tech markets are shifting toward broader equity eligibility.
The UK leads, with 58% of companies now offering equity to all employees, up 16% in the past year, with that growth coming from companies that previously offered no equity at all.
The Netherlands has seen a similar shift (+19%), and Germany is moving in the same direction (+3%).
France and Sweden have bucked the trend, both seeing slight reductions in all-employee equity – likely reflecting more comprehensive statutory benefits in those markets reducing equity's role as a retention tool, and less favourable tax treatment for both employers and employees.
Merten Wulfert, CEO of Ravio, makes the argument for offering equity to all employees plainly: "Equity is almost like a religion – to me you either buy into the religion of equity and you grant it to everyone, or you don't."
He acknowledges the practical constraint, though, too: "Sometimes the available option pool means you're faced with a difficult choice of whether to give a little bit to everyone, or give something very meaningful to a very small proportion of employees."
Figen Zaim takes a similarly strong view on defaulting toward inclusion: "If it is possible to give meaningful grants, do it. Even if the grant is small, still give it – because it's still a token. It means: we know you exist, we know you're here, we know your worth.”
For companies that do limit eligibility, the most common approaches are first hires and early employees (who are typically taking on the most risk), the leadership team (for whom equity is often a primary negotiating lever), and specific roles or levels where market competition is highest – in tech, for instance, Product and Engineering teams have historically received higher equity grants than commercial functions.
For early hires specifically, Merten warns against the common tendency to grant equity arbitrarily – for instance, offering 1% ownership to the first three hires.
"This is a bad idea," he says, "because there's no logic applied, which means inconsistencies and inequities will be there from the very start."
Instead, he recommends anchoring early hire grants to the level of risk the employee is taking on – which varies significantly depending on where the company is.
A first-time founder with no external funding and no customers will need to offer much more equity to early hires than a serial entrepreneur who has already secured significant investment and is seeing traction.
The important factors for risk profile are: how much traction the company has; what the potential upside value of the equity is, what salary is on offer, and what the candidate is giving up by leaving their current role – including any unvested equity they'd be walking away from.
The size of the option pool matters for two reasons: it determines how much equity is available to distribute, and it affects dilution – the more equity granted, the more existing shareholders' stakes are reduced.
As Rob Green, founder of Darwin Total Rewards, commented: "Boards and VCs remain firmly focused on dilution, amid a tighter global startup funding environment. So whilst equity-for-all is increasingly common, grant sizes may be under even greater scrutiny."
There's no universal standard for pool size, but a couple of useful reference points:
Most founders take a top-down approach to this – deciding what overall percentage of equity can be set aside for employees, then working out how to allocate it.
We'd recommend the opposite: start bottom-up.
That means building a hiring plan that models out the employees you plan to hire in the foreseeable future by role and seniority.
Then design a simple framework for how much equity you plan to offer per employee – factoring in new hire grants, refresh grants if applicable, and any differences by department or seniority level.
From there, you can calculate how much equity you actually need – and that's the number your option pool should be built around.
Revisit this exercise ahead of each new funding round, or whenever the company goes through a significant strategic shift.
With philosophy, eligibility, and pool size agreed, the next decision is which equity vehicle to use – and this is where legal and tax counsel becomes essential.
The right vehicle depends on your company's stage, structure, and the countries you're hiring in. Most early-stage European startups opt for a tax-advantaged scheme where one is available – EMI in the UK, BSPCE in France, KEEP in Ireland – because the treatment is significantly better for both employer and employee.
Once the vehicle is chosen, the plan rules need to be documented: vesting schedule, cliff period, good leaver/bad leaver definitions, and what happens to unvested equity on exit.
Armon Bättig, co-founder and CEO of Ledgy, advises keeping this as simple as possible early on: "Keep it very simple when you're early on, with a lot of discretion."
"Professionalise, formalise, and design with a lot of anticipation when you're growing – and as you see 18 to 24 months out to any form of corporate action, you really need to step up the game."
The industry standard vesting structure across European tech is a four-year period with a one-year cliff – meaning an employee must stay for at least 12 months before any equity vests, with the remainder vesting monthly or quarterly across the following three years.
How much equity should each employee receive?
It’s a good question – and this is where reliable equity benchmarking data for a provider like Ravio becomes critical. Without a reference point, grant decisions default to gut feel, which leads to inconsistency and – over time – inequity.
There are a few different approaches to structuring grants, the three main being:
Because it’s so unusual for companies to have this kind of clear structure and rationale behind equity compensation, there’s an opportunity to set your company’s compensation approach and employer brand apart from talent competitors, simply by establishing such a framework for equity bands.
It's also worth considering whether grant sizes should vary by function as well as level.
For instance, Product and Engineering roles have historically commanded higher equity than commercial functions – and Ravio’s equity benchmarks attest to this.
Looking at equity grant value as a percentage of total compensation (OTE), we can see that Software Engineering commands higher equity than Direct Sales at every level – at P3, a Software Engineer receives 8% of total compensation in equity versus 4% for Direct Sales, reflecting both market competition for engineering talent and the fact that sales roles already carry a significant variable pay component.
And across both functions, equity's share of total compensation grows substantially with seniority – reaching 28% for a Software Engineering E1 versus 17% for the equivalent sales leader.
Whichever approach you use for determining grant values, it’s important to introduce some element of structure – it’s very common for equity to be finger-in-the-air for each employee as they join, which might make sense early on in a startup, but quickly leads to inconsistencies down the line.
And given that equity will be reported on as part of the EU Pay Transparency Directive’s gender pay gap reporting requirements, it’s becoming increasingly important to have that structure in place.
For early-stage companies not yet ready for a formal structure, Figen's advice is to set a pragmatic waypoint: "It depends on what you’re trying to achieve, but I wouldn’t press the decision makers to go to something structured if they are still building. Let's take each individual as they join, but let's also have a cutoff point whereby we stop doing what we're doing and go into a more structured way of doing things."
Vesting is the legal process of transferring ownership of shares from company to employee – and how you design the vesting schedule is one of the most consequential decisions in your equity plan, both as a retention tool and as a signal of how fairly you treat employees.
A vesting schedule has three variables:
Together, these create the retention mechanism that makes equity compensation work: employees are incentivised to stay for the full vesting period to realise the full value of their grant. Equity refresh grants extend this further by issuing new equity with a fresh vesting schedule on top.
The market standard across European tech is a four-year period with a one-year cliff, with equity vesting monthly or quarterly thereafter – though the AI talent war is prompting some of the biggest names to rethink it. OpenAI, for instance, ended its vesting cliff entirely in late 2025, allowing new employees' equity to begin vesting immediately – following a move earlier in the year that had already halved the cliff from 12 months to six.
If you grant stock options or VSOPs rather than RSUs, you'll also need to define an exercise window – the period in which employees can convert options into actual shares. The market standard is 10 years, after which unexercised options lapse and become worthless.
The more sensitive decision is the post-termination exercise window: the period employees have to exercise after leaving the company.
Historically 90 days has been the default, and is required by some schemes like EMI in the UK (which must be exercised within 90 days of leaving employment to retain their tax advantages).
However, this can be seen as pretty unfair, penalising departing employees who are faced with a choice between not exercising their options and leaving the potential cash value of their equity compensation on the table, or exercising their options and having to pay the upfront costs of exercising and the tax required at exercise, but for stock that is not yet liquid and has no guarantee of becoming liquid if the company is not successful (known as ‘dry’ or ‘phantom’ taxation).
The key considerations here are:
One final consideration within vesting design is refresh grants – additional equity grants issued to existing employees, typically when they're nearing the end of their initial vesting period, on promotion, or tied to annual performance. Refresh grants extend the retention mechanism and ensure long-tenured employees remain financially incentivised. Our guide to equity refresh grants covers the design decisions in detail.
Equity only works as a compensation lever if employees understand what they have – and this is one of the most consistently underdone parts of equity plan design.
Armon Bättig is direct on where the responsibility sits: "It's also sometimes just a bit of a good excuse from companies to say there's not high literacy. But you can flip the coin and say it's also the employer's responsibility to educate."
"If you have an equity plan, it's your responsibility to educate – no matter the seniority."
Figen Zaim agrees, and frames it as central to the whole exercise: "It's all about education – educating the stakeholders within the decision-making process, and educating employees on why we do things a certain way."
In practice, clear communication should cover what equity is, what type of equity an employee has been granted and how it works; the vesting schedule and what it means in practical terms; what the current estimated value is and how that's calculated; what scenarios could lead to a payout; and what happens to their equity if they leave.
Ravio's compensation benchmarking data can help here too – equipping HR teams and line managers with market context for what competitive equity looks like at their role and level, which makes it easier to explain and show employees the rationale behind grant sizes and helps equity land as a real part of total compensation rather than an abstract number on a piece of paper.
Equity shouldn't be a one-and-done conversation at the point of offer. Some practical ways to build ongoing communication into your plan:
The level of detail will evolve as the company matures. Early on, a straightforward conversation at offer stage and access to documentation is often enough. As equity becomes a more significant part of total compensation and the company valuation increases, more structured education becomes increasingly important.
The decisions covered in this guide play out very differently depending on a company's size, stage, and philosophy.
Here are four real examples of how companies have approached equity compensation – each reflecting a distinct set of priorities.
Netflix pays top-of-market cash salaries, and equity is entirely optional.
Each year, employees choose what proportion of their compensation they want in cash versus stock options – including the option to take no equity at all.
Crucially, all options are fully vested from day one: there's no waiting period, no cliff, no golden handcuffs.
As former Chief Talent Officer Patty McCord put it: "If you see a better opportunity elsewhere, you should be allowed to take what you've earned and leave." For Netflix, equity isn't a retention mechanism – it's a flexible component within an already market-leading package.
Munich-based AI startup Luminovo offers virtual stock options (VSOPs) to every employee – a common vehicle in Germany where the legal and tax environment makes issuing real shares more complex.
Grants follow a four-year vesting schedule with a one-year cliff, and employees can trade base salary for additional equity options after their cliff completes.
Unusually, good leavers retain the full growth value of their vested options even after departure. The philosophy is explicit: every employee is treated as a long-term investor in the company.
Checkly grants stock options to all employees on the standard four-year/one-year cliff schedule.
What sets them apart is internal transparency: employees have access to a Notion document explaining exactly how their equity works, what it's currently worth, and what the plan rules say.
The information isn't made public – unlike their salary calculator – because it contains share price and fair market value data. But the principle is the same: employees shouldn't have to guess what their equity means.
Buffer offers equity to all employees, structured around three grant types: a new hire grant, a promotion grant issued when an employee moves up a level, and an evergreen grant at defined tenure milestones.
The equity plan is currently being redesigned, but the underlying philosophy has remained consistent: equity should reflect contribution and loyalty, not just seniority.
Employee equity compensation is a form of non-cash pay that gives employees an ownership stake in the company they work for. Rather than receiving additional salary, employees receive a share of the company's value – which becomes worth more if the company grows successfully. It's most common in startups and tech companies, where equity is used to attract talent, align employee incentives with company success, and compensate for lower base salaries in the early stages.
Employees are granted equity – usually as stock options, RSUs, or virtual shares – as part of their compensation package. The equity typically vests over time (most commonly four years with a one-year cliff), meaning ownership transfers gradually rather than all at once. Once vested, employees can convert their equity into cash when a liquidity event occurs – an IPO, acquisition, or secondary share sale. The financial upside depends on how much the company has grown in value since the equity was granted.
An equity compensation plan is the formal framework a company puts in place to grant equity to employees. It covers which employees are eligible, what type of equity is granted, how much, when it vests, and the rules around what happens when employees leave or a liquidity event occurs. Having a structured plan – rather than making ad hoc decisions – is important for consistency, fairness, and compliance, particularly as a company scales or operates across multiple countries.
To exercise shares means to convert your vested equity into actual shares in the company. In the case of stock options, this means buying those shares at the agreed strike price – pocketing the difference between the strike price and the current market value if the company has grown. Exercising is typically only possible when a liquidity event occurs (an IPO, acquisition, or tender offer), which prevents shares being sold to outside parties. If an employee leaves the company, most plans include a post-termination exercise window – often 90 days – within which they must exercise or lose their options.
An equity only role is a compensation arrangement where an employee receives no base salary – only equity in the company. This can arise at the very earliest stages of a startup when cash is extremely limited. It should be a temporary arrangement: because equity may never have any financial value if the company doesn't succeed, employees in equity only roles are effectively working without guaranteed pay. A base salary should be introduced as soon as the company has the runway to do so.
It depends on the role, seniority, company stage, and how much risk the employee is taking on. For early hires, grants are often expressed as a percentage of company ownership – typically in the range of 0.1-2% depending on seniority and stage. At growth and late stage, grants are more commonly expressed as a percentage of base salary or an absolute monetary value. Ravio's equity benchmarking data gives real-time market reference points by role, level, and funding stage across European tech.
First and founding employees typically receive more equity than later hires, reflecting the greater risk they're taking on by joining at such an early stage – and often to offset a lower salary. A common approach is to offer a set percentage to the first few hires (for instance, 1% to each of the first three employees), but this is arbitrary and creates inconsistencies from the start. The better approach is to anchor grants to the level of risk each individual is taking: how much traction does the company have, what salary are they accepting, and what are they giving up by leaving their current role – including any unvested equity.
Both approaches are common, and the right answer depends on your compensation philosophy. Most European tech markets are moving toward broader equity participation – in the UK, 58% of companies now offer equity to all employees, up 16% in the past year, according to Ravio’s 2026 Compensation Trends report. The case for going broad is strong: equity signals shared ownership and motivates employees at every level to contribute to company success. The practical constraints are option pool size and administrative complexity, particularly across multiple locations with different legal frameworks. If you do limit eligibility, the most common criteria are seniority level, specific functions (typically engineering and product), or early hires.
Rather than picking a percentage arbitrarily, start from the bottom up. Model out your planned hires over the next 18-24 months by role and seniority, use equity benchmarking data to estimate market-rate grants for each position, and factor in any refresh grants or promotion-based top-ups you plan to offer. That gives you the actual equity needed – and that's the number your pool should be built around. In practice, European startups most commonly allocate between 10% and 15% of fully diluted share capital to employee equity pools, with early-stage companies targeting at least 10% before Series A. Revisit the calculation ahead of each funding round or significant strategic shift.
Equity benchmarks reflect market data on what comparable companies are granting to employees at similar roles, levels, and funding stages. Ravio's equity benchmarking data is drawn from direct HRIS integrations across 1,500+ European tech companies, giving real-time reference points for equity as a percentage of total compensation by role and seniority. Options are priced using the Black-Scholes methodology to ensure comparability across different equity types and structures.
Tax treatment varies significantly by country and by the type of equity granted – and getting it wrong can be costly for both employer and employee. As a general principle, tax tends to apply at the point of exercise or vesting (when shares are received or converted), and again at the point of sale. Many European countries have tax-advantaged schemes designed to make equity more attractive: EMI in the UK, BSPCE in France, and KEEP in Ireland are the most common. The types section of this guide covers the key tax considerations for each vehicle. For any specific situation, qualified legal and tax advice is essential – particularly for companies with employees across multiple jurisdictions.
In a private company, equity works the same way in principle – employees receive a stake in the business that grows in value if the company is successful – but the main difference is liquidity. Unlike public company shares, private company equity cannot be sold on the open market. Employees can only realise the value of their equity when a liquidity event occurs: an IPO, acquisition, or secondary share sale. Until then, the equity exists on paper. This is why vesting schedules, exercise windows, and good/bad leaver provisions matter so much in private company equity plans – the rules governing what happens to equity are often the difference between employees actually benefiting from it or not.
Two types of software are relevant here. For benchmarking – understanding what market-competitive equity looks like for your roles, levels, and locations – Ravio provides real-time equity benchmarking data drawn from direct HRIS integrations across European tech companies. For equity plan management – administering grants, tracking vesting schedules, managing cap tables, and giving employees visibility into their equity – Ledgy is a leading platform used by companies across Europe.
Start with the basics: what equity is, what type they've been granted, how vesting works, and what needs to happen before they can convert it into cash. The most common gap is employees not understanding what a liquidity event means in practice, or how to estimate what their grant might be worth. Using real scenarios – "if the company is acquired for X, your vested equity would be worth approximately Y" – makes it tangible. Beyond the initial explanation, equity shouldn't be a one-off conversation: funding rounds, valuation updates, and performance reviews are all natural moments to reconnect employees with the value of what they hold.
Start with your compensation philosophy – what role do you want equity to play, and who should receive it? From there, the key structural decisions are: which vehicle to use (stock options, RSUs, VSOPs, or another instrument), how grants are sized (absolute amount by level, percentage of salary, or equity bands), the vesting schedule, and the exercise window. Each decision should be documented in a formal equity plan. For most early-stage European startups, a tax-advantaged scheme (EMI, BSPCE, KEEP) with a four-year vesting period and one-year cliff is the starting point – but the right structure depends on company stage, jurisdiction, and the goals the plan is designed to achieve. The step-by-step guide above covers each of these decisions in detail.
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Join Merten Wulfert (co-CEO, Ravio), Armon Bättig (CEO, Ledgy) and Figen Zaim (Founder and Managing Consultant, Olivier Reward Consulting) for an honest conversation about what a well-designed employee equity plan actually looks like – sharing data from Ravio and Ledgy and real experiences on what works.
Equity refresh grants give additional equity to employees who received equity compensation when joining a company. They can be a great employee retention strategy.
Ravio’s data shows the vast majority of companies have a 4 year vesting schedule with a 1 year cliff. Why? And when might you implement a different vesting schedule?