If you draw your line at 12%, you will simply never get a job at a post-funding startup as a non-executive. Even as an executive, it's unlikely. (reference: http://venturehacks.com/articles/option-pool-shuffle - see the chart 2/3 of the way down).
I agree this isn't a stellar deal. He's giving up $50k for one year. His vested options after that 1 year of risk should be at least $50k in value at the current valuation (though it's possible they've made considerable progress since the valuation was established). I'm not going to touch the fact that you've tossed in severance and "career risk" into your formula. And adding 30% for overtime?! Most 6-figure jobs are >40h/week. /boggle
Of course, a lot of startups can't match BigCo dollar for dollar and don't try-- because they win on other fronts (work environment, autonomy, etc).
I agree this isn't a stellar deal. He's giving up $50k for one year. His vested options after that 1 year of risk should be at least $50k in value at the current valuation (though it's possible they've made considerable progress since the valuation was established). I'm not going to touch the fact that you've tossed in severance and "career risk" into your formula. And adding 30% for overtime?! Most 6-figure jobs are >40h/week. /boggle
Of course, a lot of startups can't match BigCo dollar for dollar and don't try-- because they win on other fronts (work environment, autonomy, etc).