Which one do you prefer more in compensation, esop or cash? If not one over other then which ratio (equity bs cash) you go with and reasons behind it?

Usually cash. ESOPs are extremely complicated and can go horribly wrong. See how taxes work on them: https://jvns.ca/blog/2015/12/30/do-the-math-on-your-stock-options/ But if ESOPs are offered with something like a 10 year exercise period I would consider them.

Read my response after reading the article @Hari linked to. Assumption: I believe that the company will keep growing and do well. If the company is public or about to go public: high equity because it helps me reduce tax till I actually need it. Otherwise depends on how it's structured. After having learnt it somewhat the hard way, I now think of it as investing in the company. So ask yourself what kind of risk appetite do you have for the stage the company is in. Golden setup for ESOP: • 10 year exercise period. • 1 year 25% cliff with equal monthly vesting after that. • Accelerated vesting on exit, acquisition. • Top ups built into appraisal process. • Simple structured buy back. • All investors are 1x liq-pref. • Low number of classes of shares. • Transparency overall about financials inside the company. • ESOP known in both % and cash. Even when they're not favourable, the more I know the answers to these questions from above, higher chances of opting for higher ESOPs. Transparency is high up in my priority.

• All investors are 1x liq-pref. • Low number of classes of shares. Where do you get these two? Isn’t it extremely hard to know for most early/mid-stage companies. • ESOP known in both % and cash. Most companies I cam across mention cash and not percentage; giving reason as price might depend on your date of joining. Rest are golden.

@loud-artist-61521 isn't it possible to calculate the % stake if one knows his ESOP valuation (mentioned or told by HR to glorify the offer) and company's valuation which is available on internet?

You are directionally correct but few problems: • Early stage companies don’t give out exact numbers / announce them late • Your joining might be 1-2 months away and the company might raise another round in between where your calculations are off • Finally most startups don’t mention the strike price (cost at which you buy) in the contract. This is from what I have seen.

@loud-artist-61521 Based on the answers of other questions, if I am considering equity, I will ask about them and see how they answer. For example with the ESOP % thing, follow up questions would be things like "What is it based on the last round?", "What are the number of options?" etc. @elegant-rose-70104 it can be difficult to know the true valuation itself. But if you do, you can back calculate roughly. Even when you're told this number, it can vary based on: • Was it from the last round or has it been done recently for a future round. • If last round, is it pre-money or post-money? PS: classes of shares and liq pref setup can vastly change what you calculate based on simple % and what you actually end up with in hand when an exit happens.