An equity offering of 1-5% doesn't offset the reduced salary. That equity typically doesn't imbue the recipient with the same authority as the founders' equity imbues them. Yet, for example, Hire #1 in a two-founder startup is pretty darn close to sharing 1/3 rd of the risk as the founders. It's just that his risk is assumed to be amortized over the term of his tenure and slightly reduced by a salary, so it has the appearance of being significantly less than it really is, even though neither component of that assumption is valid.
Being able to raise a seed round is a non-trivial hurdle and is not something most engineers can do. Compensation isn't really about risk (which is low for everyone involved given the current employment market), it's about value and opportunity cost.
I agree with the logic that gives very early employees 3-5% equity stakes. Any more than that I think is unfair to founders and angels -- there is real value in getting even a reduced salary. Most founders have worked for a year or two without any cash comp, at something that may look absolutely ridiculous on a resume. That is a humongous risk. Those coming in after that risk, plus the risk of failing to raise the seed money, are IMSHO taking about an order of magnitude less risk, therefore the 3-5-ish percent number makes sense.
Don't even get me started on this idiotic "we put 15% aside for employees" crap. Fogedaboudit. $80 to DE and you've got 10 million more shares to play with. Not my fault you failed to get the arithmetic right the first time around.
