The Fair Share: A charter for maximising employee equity

Here at Carta, we speak to startups on a daily basis. And since we’re in the business of equity, we’re familiar with the challenges and questions many founders face when deciding how much ownership to grant their employees.

Who should get equity and when? 
How generous do you want or need to be?
Who do you need to hire to get to your destination? 

So, we joined forces with some of Europe’s leading law firms and VCs to create The Fair Share – a set of principles and operational recommendations for managing employee equity.

This article explains the goals and guiding principles of The Fair Share, and how different stakeholders can leverage this resource. You can download the full charter for free and share it with other founders, investors, lawyers and employees.

Special thanks to our partners who made this initiative possible: Orrick, Phoenix Court, Point Nine and Seedcamp.

What’s the purpose of this equity charter?

The Fair Share has been created with the following goals in mind:

1. Help founders identify and overcome common equity-related issues 

From deciding who should keep vested options to managing share schemes in different countries, the considerations involved in granting equity can feel overwhelming – especially for founders with no prior experience. Basing equity decisions on market data and industry guidelines can help companies develop a fair and scalable compensation strategy from the get-go.

2. Drive alignment between startup founders and board members

As many founders know, employee equity is one of the most contentious items on the board’s agenda – and getting it right is critical. While each board member can offer a valuable perspective on what ‘good’ equity practices look like, this won’t necessarily reflect market standards or the founder’s compensation philosophy. Following a set of equity principles can help startups build a well-rounded, scalable framework.

3. Guide the long-term success of venture-backed companies

If talent is the engine of a startup, then equity is the fuel. Well-incentivised teams give companies a greater chance of success, and more success throughout the venture ecosystem helps to inspire the next generation of founders and builders.

Who is it for?

The Fair Share is a valuable resource for anyone with a vested interest in employee equity – whether you’re new to the game or a seasoned professional.

Founders, execs, general counsels and people leaders: use this charter to design or refine your company’s equity compensation strategy. It’s intended to be shared with employees as well, giving your team more visibility into how their equity is governed.

Law firms, advisors and VCs: get up to speed with equity trends, market standards and best practices. Combined with your industry experience, this charter will help you guide your clients and portfolio companies to success in today’s climate.

What are the guiding principles?

Our equity charter consists of seven key principles:

1. Communicate that equity value can go up and down

2. Take a data-driven approach to equity from day one

3. Award market-winning equity, wherever you hire

4. Regularly refresh equity for top-performing employees

5. Default to ‘good leaver’ status

6. Make employee equity a board-level concern

7. Pair equity for all with a high-performance culture

Download the full charter for a detailed explanation of each principle, including best practices and recommendations.

A note on contributors

Despite our deep expertise and wealth of data, we know that Carta doesn’t have all the answers. By partnering with prominent VC and law firms, we’re able to draw on their commercial and legal experience to provide a more comprehensive outlook on startup equity management. 

We are honoured and grateful for the contributions from leading European VC funds (Phoenix Court, Point Nine Capital and Seedcamp) and Europe’s most active law firm for venture deals, Orrick LLP.