The Salary or the Stake: What You Choose When the Company Offers You a Piece of It

Nearly every skilled operator, engineer, or early-stage builder faces a similar conversation at some point. A founder offers a role at a young, fast-moving company. The salary is below market, but they also offer equity—a stake in what they are building.

You look at the number on the equity line, and it feels abstract. You look at the number on the salary line, and it feels real. You have rent, or a mortgage, or a family, or a parent who needs something, and the gap between what they are offering and what you could earn elsewhere has a weight to it that the equity simply does not. So you negotiate the salary up, ask them to reduce the equity component, or take the higher cash offer from the more stable company down the road.

This often feels like the responsible choice. However, years later, seeing the company’s success from afar, it can feel like a costly decision.

Paul Onwuanibe built what became West Africa’s most visited destination, a mixed-use development that welcomed 4.5 million visitors a year at its peak, employed over 4,000 people, and was valued at $200 million. But before any of that, he was a young professional working for a serial entrepreneur named Mark Dixon at Regus, which would eventually become the world’s largest flexible office network.

Early on, Regus faced financial difficulties and could not make payroll. Dixon offered his core team a choice: accept a 5% equity stake instead of the salary shortfall and support the vision. Paul, with a mortgage and family responsibilities, chose the salary. Four of his seven colleagues chose equity.

When Regus floated on the stock exchange, those four colleagues cashed checks worth $70 million each. Paul received a pat on the back.

He tells this story without bitterness and without the revisionism that turns a mistake into a lesson that sounds cleaner than the original experience. What he says is simply this: if you believe in something implicitly, you have to back it. You cannot keep your conviction in one pocket and your security in the other and expect to arrive at the same place as the person who put everything on the line.

This story resonates not because Paul was overly cautious or unambitious, but because he acted rationally. The startup could have failed, and the equity might have been worthless. Financial obligations remain, regardless of the company’s outcome. Most people are trained to avoid downside risk, and equity in a struggling startup often appears risky.

The gap between what people say they value and what they actually choose when a concrete offer is in front of them is wide, and the reason is not a lack of conviction or weakness. It is that cash is legible and equity is not. You know exactly what a salary is worth. You have very little idea what a stake in an early-stage company is worth, because the honest answer is that it might be nothing.

The salary-versus-equity decision gets framed as a financial calculation, but the more honest version of the question is about belief. Not enthusiasm, which is easy to feel and easy to maintain when nothing has been staked, but the specific kind of conviction that is only proven by what you are willing to put on it.

The most clarifying question a founder can ask when structuring compensation is whether they are using equity to create ownership alignment or to compensate for limited cash. The answer reveals whether the compensation strategy is intentional or reactive, and the same question is worth asking from the employee’s side of the table: am I taking this equity because I believe in what this becomes, or am I treating it as a discount on a lower salary?

Your answer should guide your negotiation strategy and the importance you assign to each part of the offer.

The problem with the salary-versus-equity decision is that it is almost always made under time pressure, in the context of a specific negotiation, with incomplete information and a real salary differential sitting on the table. By the time the conversation happens, most people are already leaning toward the cash without fully examining why.

Here are the questions worth sitting with before you get there.

1. Do you truly believe in the company, or do you simply like the idea? Genuine belief means having confidence that this team, solving this problem in this market, can build something significant. Without that conviction, equity may not justify the salary sacrifice. With it, the decision changes.

2. What stage is the company, and what does your equity represent? Most startups allocate 10 to 20% of shares to employees. Early hires receive larger grants and more time for equity to appreciate. Joining at pre-seed is a different risk than joining at Series B with a smaller percentage.

3. What is your current risk capacity? Paul’s choice was only a mistake given his strong conviction about Regus. Others with different financial situations or certainty levels might have made the same choice and been correct. The key question is whether your circumstances allow you to take the risk that equity involves, based on your belief in the outcome.

4. Are you negotiating salary out of necessity, or because it feels safer? These motivations have different implications. If you cannot meet your needs on the offered salary, negotiate. If you seek certainty due to equity’s uncertainty, consider whether this reflects your financial reality or loss aversion.

At the early stage, when risk is highest and ownership is most significant, answer this question honestly, not hastily. Not everyone should accept equity, and not every company merits that conviction. If you truly believe in a founder’s vision and are offered equity in exchange for security, recognize that the responsible choice and the right choice may differ.

Be certain of your choice before you decide.Have you ever turned down equity and watched the company succeed without you? Have you taken the stake and had it pay off, or had it amount to nothing? Have you watched a colleague make the opposite choice and seen how it played out differently? Share your experience with us in the comment section.

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