Traditional stock-option schemes, designed for single-market startups with predictable valuations, often collapse under the weight of global expansion, volatile fundraising, and aggressive competition for AI expertise. What’s required is an equity approach that’s strategic, transparent, and flexible across borders.

Navigating jurisdictional and tax complexity

The first hurdle in designing equity for AI scale-ups is legal and fiscal fragmentation. Most countries have their own tax-favored employee-share schemes, often restricted to domestic companies and capped at modest valuation thresholds.

For example, the U.K.’s EMI plan provides favourable tax treatment but only for qualifying U.K. employees. Other European countries also offer tax benefits for start-ups, but once companies outgrow these schemes – or do not qualify for them – taxation and social-security costs can make equity grants far less attractive. The U.S. offers the ISO/NSO framework but demands careful adherence to strike-price and valuation rules.

As AI firms expand globally, they quickly outgrow these local incentives. A young company may start under a national plan but, after a major funding round, lose eligibility. The result: inconsistent treatment between employees, compliance headaches, and reduced motivation.

Scale-ups can respond by:

• Identifying two or three priority jurisdictions for optimization (typically where most staff are based).
  
• Adopting globally neutral instruments, such as non-qualified stock or options, restricted stock units (RSUs) or simply co-investment, for everyone else.
  
• Communicating the plan differences clearly, so employees understand not only what they receive but why it differs.

These choices demand foresight and continuous review, especially in an environment where valuations can double, or halve, within months.

Erika Andersson, Rickard Vernet and Harald Johansson have been advising scale-ups, including several unicorns, for more than a decade. Together, we have compiled a set of do’s and don’ts drawn from firsthand experience.

Do’s: Build discipline from day one

1. Launch an equity plan early, even if modest.
A clear ownership plan, however small, signals professionalism and partnership. Even symbolic grants foster alignment between founders and employees and create early cultural buy-in.

2. Plan for dilution before it happens.
Map out hiring for at least 24 months and model your option-pool “burn rate.” Update that model with each round of funding, considering both granted and unexercised options. By tracking available pool capacity, you avoid rushed negotiations with investors later.

3. Develop a total-rewards strategy, not just an equity plan.
Equity is a key competitive advantage in the total reward strategy för scale-ups, but cash covers today’s needs. Define a clear strategy around both cash and equity compensation, to provide clarity for employees and attract the right talent. And remember that equity grants should be included in your gender pay gap analyses.

4. Keep the structure simple and transparent.
Avoid overly complex or exotic instruments that few understand. Choose structures your finance and HR teams can actually administer. Provide employees with plain-language summaries, FAQs, and sessions to explain vesting, taxes, and potential value.

5. Tie equity to real liquidity opportunities.
Employees are most motivated when they can see how their efforts might convert to tangible outcomes. Communicate a framework for future liquidity – secondary sales, buybacks, or funding-round windows – and consider a “sell-to-cover” mechanism so they can pay tax obligations without personal strain.

6. Emphasize value over volume.
Present awards in terms of starting value rather than number of shares. This approach keeps your logic consistent as valuations change and prevents internal comparisons based on misleading share counts. Be extra mindful when communicating the value in an early start-up since it's very uncertain -- a way of addressing this is to present a few different scenarios. 

7. Document everything, and use reliable systems.
Keep detailed records of grants, approvals, valuations, and agreements. Proper documentation protects both the company and employees in due diligence or exit events. Use a digital platform to automate tracking, vesting, and reporting – manual spreadsheets rarely survive the Series B stage.

Don’ts: Avoid the traps that destroy trust

1. Don’t grant equity ad-hoc.
Individual negotiations might work for early hires but soon lead to inconsistency and resentment. Establish clear grant bands by level, geography, and timing. Consistency builds credibility and speeds hiring decisions.

2. Don’t oversell the dream.
Equity can change lives, but it’s not a given. Avoid promising specific returns or timelines. Be candid about valuation risk, dilution, and the limited frequency of liquidity events. Employees appreciate honesty more than hype.

3. Don’t underestimate global complexity.
Trying to optimize for every jurisdiction drains resources. Focus on your 2-3 main hubs and keep a pragmatic, compliant baseline elsewhere. “Perfect” is the enemy of scalable.

4. Don’t neglect cash compensation.
Equity builds wealth; salary pays the bills. Under-paying base salaries to emphasize ownership can cause stress and turnover, especially in high-cost markets. Rebalance your mix as maturity and funding allow.

5. Don’t forget refreshers and top-ups.
After four years, fully vested employees can become flight risks. Implement refreshers linked to continued tenure and top-ups for key talent. This keeps critical talent engaged through the next growth phase and avoids “cash-out” attrition.

Equity as a growth engine

Equity, when managed well, is more than a compensation tool, it’s a growth engine that aligns founders, employees, and investors around shared success. The best programs balance ambition with sustainability: they are legally sound, globally scalable, and psychologically rewarding.

From ownership to partnership

Equity is ultimately about trust. In the fast-moving AI economy, where talent and technology outpace regulation, clarity and fairness matter more than ever.

Companies that view equity not as a perk but as a partnership mechanism will build the strongest teams, retain their innovators, and sustain growth through every stage of scaleup.

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Our experts, Erika Andersson with support from Harald Johansson and Rickard Vernet, share their insights from advising scale-ups and unicorns.

Read the full article on Forbes here!