At Euclid, our employees’ contributions are integral to our future success. We expect employees to act like owners of the company, and we’re proud to offer all employees equity packages to reflect that. Equity packages offer the potential for significant financial rewards as the company thrives and increases in value over time. By sharing in the company's success through equity, we ensure that everyone is invested in achieving our collective goals and creating sustainable growth for the future. We want everyone at Euclid to have skin in the game and to come to work every day knowing that Euclid’s success is their success too.
In this page you will find…
Equity is non-cash compensation that represents your ownership interest in the company. Equity only grows in value as the company grows in value. While there is no guarantee, we believe that there is potential for our equity to grow significantly in value if we are able to execute on our vision. Working at a startup inherently involves some risk, so as compensation for that risk, we’re giving you the opportunity to share in the company’s success. Many of the wealthiest business leaders (Gates, Jobs, Bezos) didn’t get to that point by making a big annual salary - they did it by owning equity that grew exponentially in value. Our equity compensation has been designed with our stage of growth, size, and age in mind. Every compensation package at Euclid includes an equity component, usually in the form of Incentive Stock Options (ISOs). Equity distribution at Euclid is based on market data and is determined by a number of factors including tenure, position, and performance.
At each fundraising round, we allocate a block of shares specifically for employees: an employee stock option pool (ESOP). The value of that pool (& all our equity) is determined by the per-share value of our common stock, which is generally determined by the terms of our most recent fundraise (until we IPO). When you receive equity options, you're essentially being granted the right to purchase a certain number of shares of the company's stock at a predetermined price (known as the strike price) at some point in the future. The “value” of this equity is the difference between the strike price that you pay to acquire your shares and the price of the company’s common stock at the time of exercise. Example: In the example below from Carta, let’s say you received 5,000 stock options with a strike price of $1.00/share. In a few years, Euclid raises a series D with a share price of $152/share and employees are given the opportunity to sell their shares. I would have to have to pay $5,000 (5,000 * $1.00) to receive my shares which are now worth $760,000 (5,000*$152), resulting in a net “value” of $755,000.
Options are typically subject to a vesting schedule that corresponds with your time spent working with the company. Euclid follows a common structure where options vest monthly on a four-year schedule with a one-year cliff, meaning that you vest no shares until your 1-year anniversary with the company, at which point the first 1/4th of your shares vest, and then 1/48th of your shares will vest each month thereafter. If you leave the company for any reason during this period, you will cease vesting and forfeit any unvested shares remaining.
Once your options have vested, you are free to exercise them (i.e. purchase your shares) at any time while you remain employed at Euclid. However, if you leave the company, this triggers a 3-month window to exercise your vested options before they expire.
It’s likely that Euclid will raise additional capital from investors to further fund our growth. When Euclid takes on additional equity funding, it will issue additional shares in the company, meaning that your existing shares will represent a smaller percentage of the overall company, which is known as dilution. However, additional funding generally coincides with a step up in the valuation of the company, so even though you own a smaller piece of the overall company, that piece will be worth more.
Example: There are 20 million shares of a company outstanding, and I own 5 million of them (25% stake). The company is worth $20M, so my stake is worth $5M today. The company then decides to fundraise, issuing an additional 5 million shares and valuing the company at $50M. There are now 25 million total shares outstanding, so my stake has been diluted to 20%. However, that stake is now worth $10M (20% of $50M), which is double what it was worth before the fundraise.