I am very excited about the prospect of you joining Tophatter ("The Company"). This is your offer letter. Below you will find details regarding your salary, equity, and benefits, as well as some additional things to know before starting. If you have any questions at all, please feel free to call me at 415-605-5753. I look forward to your response and (hopefully!) working together.
September 22, 2018
We have generated 3 compensation packages for your consideration. One has an emphasis on base salary (cash), the other is emphasized on equity. The mixed option is in the middle and is selected by default.
Salary at Tophatter is determined by market value for your position from data sources such as Salary.com. We target salaries to be at the top 25th percentile of the market.
The graph below shows the Tophatter capital structure. Only Preferred holders are paid for exit values less than $25.7M.
For exits greater than $50M, your option value can be calculated as follows:
(ExitValue * EquityOwnership) - ExerciseCost = OptionValue
For example, if Tophatter is valued at $200M your option grant's intrinsic value is:
$200M x 0.02% - $500 = $39,500
Please note this is a fictional example to illustrate the calculation and is not a forecast.
Your options will "vest" over 4 years. Vesting means you earn the right to purchase (exercise) those shares, at which point you own them. As you can see in your schedule, the first chunk of shares that you vest is one year from your start date. This is called a cliff. You'll vest 25% of your options on your cliff date. After that, you'll vest 1/48th of the remaining shares each month.
Equity is a difficult topic to understand for newcomers. We recommend Joshua Levy's open guide for a primer.
Estimating the value of your option grant is hard. Here is how we encourage you to think about it:
We're required to include this legal language here. Please let us know if you have questions.
Your home office is San Francisco.
Everyone at Tophatter commutes to their non-home office 1 day every week. Your commute day is Tuesday. The address for the San Francisco office is below.
Your commute schedule