Early employees are not required to receive any stock. It all depends on the corporation, the company management and the board of directors. It all depends on what they would like to give as stock options. If stock options are given to early employees, you can purchase these options at a fixed price. The price you pay is usually set by the board of directors of the company. If it's before the initial public offering, the price may be quite low. An early employee can be given shares at this fixed price before the IPO. It's the hope of the company that these shares will increase employee retention, and if the company ever goes public, your stock will be worth more than the option price. It's the vesting schedule that sets forth the time and the amount of stock you can purchase.

Let's say you're compensated at a startup with a $100k per year salary, then the company can save money to pay you by offering you stock options. This way, they may not have to pay you the $110k annual salary, but these stock options can be valued at that. Startup companies do not have to give a percentage of the company away to offer stock options.

Here are some great links to read about stock options:
http://www.crn.com/it-channel/18813565 http://www.asktheheadhunter.com/gv040510.htm http://www.corante.com/bottomline/articles/20020516-788.shtml

In the current economic climate i believe that a early employee should be putting *more into their 401k and stock package than they make annually* .

It shows they support the company they work at and support the healing process of the economy.

The best advice I can offer for this question is to read Guy Kawasaki's book, "The Art of the Start"

Here's the greatest link ever...I asked the same question of a friend who took his company public...
http://www.askthevc.com/blog/archives/2007/06/what-are-typica.php