The formula doesn't address a (common?) case: people joining an early stage startup sometimes (often?) accept lower pay than they could get somewhere else in exchange for equity.
Given that the formula for number of shares is based on annual salary, you're double-screwed in that case: not only you get paid less but you also get less shares because of that.
Or am I mistaken in my assumption that early stage startups pay less than stable, successful companies like Google, Yahoo or Cisco and attract people mainly with a promise of shares that some day might be worth a lot?
Given that the formula for number of shares is based on annual salary, you're double-screwed in that case: not only you get paid less but you also get less shares because of that.
Or am I mistaken in my assumption that early stage startups pay less than stable, successful companies like Google, Yahoo or Cisco and attract people mainly with a promise of shares that some day might be worth a lot?