It's a great point that the approach you take for the first few key hires is different from the longer-term approach. With my 1990s vc-funded startup Intrinsa, we took a similar approach: looking at percentages for the first handful of employees during our seed funding, and then in terms of estimated value of the equity once we closed a multi-million dollar funding round.

Thinking of it in terms of "brackets" as Fred does also makes it easy to explain to new and current employees, so creates a feeling of fairness across the different organizations as things scale.