How should a startup balance salary and equity for early engineers?

The most workable approach is to fix a compensation philosophy first, either near-market salary with a modest grant or a lower salary with a larger grant, and then apply it consistently rather than negotiating each offer from scratch. Carta's H1 2026 compensation data put the average new-hire salary for engineering roles at $189,000 as of June 2026, tied with product for the highest-paid function and up 5.8% from three years earlier, while reported equity grant sizes stayed comparatively flat over the same stretch.

What are the concrete steps for setting the offer?

Set the cash floor first

Decide how far below (or at) market salary you are willing to go before equity enters the conversation. A number that keeps someone from covering rent will not be offset by a percentage on paper, no matter how the grant is framed.

Size the equity grant to stage and role

Grants are typically largest relative to salary at pre-seed and seed stage, when the option pool is being carved out for the first time, and shrink as later funding rounds add more people to split the same percentage against. Tie the size to scope of impact and how early the person is joining, not to job title alone.

Confirm the vesting structure

The near-universal default is four-year vesting with a one-year cliff: nothing vests before month twelve, 25% vests at the one-year mark, and the rest vests monthly for three more years. Departing before the cliff typically means walking away with nothing, which is worth stating plainly during the offer conversation.

Put the philosophy in writing

Write down the salary-versus-equity split you are using and apply it the same way for comparable hires. Inconsistent one-off deals are what surface later during a financing round or when employees compare notes.