What kinds of equity do international hires get?
The type of award decides what you own, when you pay, and how you're taxed.
| Stock options (NSOs) | RSUs | Phantom stock / SARs | |
|---|---|---|---|
| What you get | The right to buy shares at a fixed strike price | Shares delivered when they vest | A cash payment tied to share value |
| Do you pay to get it? | Yes, the strike price when you exercise | No | No |
| Typical company stage | Early and growth-stage startups | Later-stage and public companies | Companies avoiding foreign share plans |
| Own real shares? | After exercise | Yes, after vesting | No |
| Main risk | Paying to exercise shares that later lose value | Tax at vesting before you can sell | Payout depends entirely on plan terms |
Why do international contractors get NSOs instead of ISOs?
ISOs are a US tax category that can only be granted to employees. Contractors, and most people hired through a foreign entity or an Employer of Record, receive NSOs instead. ISO tax advantages mainly matter to US taxpayers anyway; your home country will apply its own rules to either type.
How do vesting, cliffs and exercise windows work?
A short exercise window can force you to pay to exercise, and possibly pay tax, within weeks of leaving, or lose the options.
- Vesting: you earn your grant over time, often four years
- Cliff: nothing vests until a set date, often one year, then a block vests at once
- Exercise: paying the strike price to turn vested options into shares
- Post-termination exercise window: how long you have to exercise after leaving; 90 days is common, some companies allow years
- Expiry: options usually expire about ten years after grant
When are you taxed on stock options outside the US?
Each country sets its own timing. Some tax the gain at exercise as employment income, some at vesting, some only when you sell, and some treat contractor awards differently from employee awards. Moving country while options vest can split the gain between two tax systems.
The US 83(b) election is a US tax filing. It's relevant only if you're a US taxpayer or receive restricted shares that could be taxed by the US; most non-US residents with options never use it.
How should you value an equity offer?
A number of options means little on its own. Divide your shares by the fully diluted shares outstanding to get your ownership percentage, then compare the strike price with the latest preferred-share price or valuation. Remember investors usually get paid before common shareholders in a sale.
Many startup options end up worth nothing. Treat equity as a possible bonus and negotiate a cash rate you'd accept without it.
What should you ask before accepting startup equity?
Ask for the grant agreement and plan document in writing, not just the offer letter.
- How many shares or options, and how many fully diluted shares exist?
- What is the strike price and the latest valuation?
- What is the vesting schedule and cliff?
- What is the post-termination exercise window?
- Can I legally receive and exercise this grant in my country?
- What happens to unvested equity if the company is acquired?
Frequently asked questions
+Can international contractors get stock options?
Yes, usually as NSOs. Some companies use phantom equity or cash bonuses instead where local securities rules make share grants difficult.
+Can a non-US contractor get ISOs?
No. ISOs can only be granted to employees, and their benefits are designed for US taxpayers.
+Do I pay tax when my options vest?
It depends on your country. Some tax at vesting, many at exercise, and some only on sale.
+What happens to my options if I leave?
Unvested options are usually forfeited. Vested options must be exercised within the post-termination window or they expire.
+Are startup stock options worth it?
Sometimes, but many end up worthless. Value them conservatively and make sure your cash pay works without them.