A rule of thumb for startups is to set aside a pool of stock options that equates to 10% of the company following its first round of funding. This employee stock option plan will be used as compensation for future employees, that is, employees beyond the founding team.
A good rule of thumb regarding equity ownership in your company is to institute a vesting schedule on stock grants. This has numerous benefits the two primary being:
The rule of thumb for vesting time horizon is a 1 year cliff followed by straightline monthly vesting.
A good rule of thumb for a startup environment is to avoid “deferred” compensation. Any type of investor (bank, angel, friends and family, and especially venture capitalists) will view deferred compensation as a significant deterrant. Since deferred compensation has seniority over all other stakeholders, it adds a level of risk to their investment. A better way to compensate yourself is through paying yourself in equity through an earnout or vesting schedule.