# Design an employee equity compensation plan

A stage-appropriate plan covering equity instruments, pool size, grant guidelines, vesting terms, pitfalls, and how to explain it to employees.

- Topic: HR & Hiring
- Framework: Few-Shot
- Level: Advanced
- Tags: HR & Hiring, Finance, Analyze, Plan, Fill-in Template
- Source: https://www.thinkwithprompt.com/prompts/design-an-employee-equity-compensation-plan

## Prompt

```text
Help me design or review an equity compensation plan for my company.

**Company stage and type:** [e.g. "Series A startup", "private profitable company", "public company"]
**Where employees are based:** [COUNTRIES or STATES]
**Headcount and hiring plan:** [NOW and NEXT 12-24 MONTHS]
**What we want equity to do:** [attract talent / retain key people / align with an exit / reward performance]
**Current plan, if any:** [pool size, instrument, vesting, refresh policy]
**Constraints:** [dilution limits, cash position, investor requirements]

Cover:
1. **Instrument options** that fit our stage: stock options (e.g. ISOs and NSOs in the US, or local equivalents), RSUs, restricted stock, phantom stock or SARs, profit-sharing units. For each: how it works, when tax generally applies for the employee and company, admin burden, and when it fits.
2. **Pool size:** typical ranges for our stage and the trade-off against dilution.
3. **Grant guidelines by level:** a framework (percentage or value bands), not fixed numbers I haven't confirmed.
4. **Vesting and terms:** cliff, schedule, refresh grants, exercise window after leaving, acceleration on change of control, and what each choice does to retention and fairness.
5. **Common failure modes:** grants employees don't understand, pool used up too early, unequal grants driven by negotiation, valuation (e.g. 409A) and securities-law issues, international employees.
6. **Employee communication:** an outline for a plain-language explainer so people understand what they own and what it could be worth.

Return a short plan with a summary table: Element | Recommendation | Rationale | Open question.

Mark any benchmark you're unsure applies to us [CONFIRM]. This is general information, not legal or tax advice. Have a qualified lawyer and tax advisor review the plan before adopting it.
```

## What to fill in

- COUNTRIES or STATES
- NOW and NEXT 12-24 MONTHS
- pool size, instrument, vesting, refresh policy
- dilution limits, cash position, investor requirements
- CONFIRM

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