Trading Cash Compensation for Options in a Startup: A Formulaic Approach

Sean told me about this approach to compensating employees at an early stage startup and I'd be interested in some feedback:

You take what you normally would pay someone and for every dollar that they don't take in cash, you give them two dollars of equity.

So, if a developer normally gets paid $100k, and he agrees to work for your startup for $60k, then you have to give up $80k worth of options.

It's really the first time I've ever someone put something logical like that on paper.  Has anyone seen this before?

Blogged with Flock

Does Jamba know we Twit?: 10 ways marketers should take advantage of Twitter (lol!)

Subway Thumbing