You just need to apply for roles with public companies that offer liquid equity. Very few of us are getting 250k+ on base salary alone. Most of us have the salary bands you’re already in, but have additional equity pay on top. It doesn’t have to be a FAANG either. There are loads of public companies out there hiring engineers at 250k total comp.
I’m seeing two strategies that are friends are using to get to $250k+ right now and much more…
1. Several have left for left/right coast former startups companies that are publicly traded. Their base comp is $160-180k but they are also receiving a large pool of equity that vests in tranches of $75-100k a year.
2. With everything being remote, several senior engineer friends are working two jobs at the same time. Some are telling their employers and others are not.
Companies are desperate for senior engineers and many are unable to compete with the “we’re remote, have free beer and no vacation policy.”
> That's for lying, and I've never heard of anyone going to court over it.
In the US employment is at will and can be terminated for cause or no cause at all, no need to go to court. Omitting important facts about employment history can be in violation of company policies. Some telecoms ask you to explicitly submit information for "employment history verification" as a condition of employment.
Comparing Jobs and references is not apples to apples,. One is understood to be a list of employers you've had in recent years,. The other is understood to be one to three people that would recommend your skills not every single person you've worked with the last 10 years..
You can easily lie by omission.. The root of it is deceitful intentions.
Is there a law mandating that all employment be listed? Omitting a high school fast food gig is accepted, why is omitting moonlighting not? It's not lying about education or employment, so I don't see how it is fraud.
Unfortunately, there is no clear cut rules about what constitutes resume fraud. Making up employment records is clearly a resume fraud. Omitting employment could be construed as fraud depending on the context. Omitting ice-cream parlor gig while in high school is probably OK. Working for Google and Facebook at the same time and omitting one might be not.
"Employment relationships are presumed to be “at-will” in all U.S. states except Montana. The U.S. is one of a handful of countries where employment is predominantly at-will."
If you lie about having a job this can be found out (they can call the place)
If you omit one or several jobs, I don't know how they would know (call all places to see if you also worked there?).
> I don't know how they would know (call all places to see if you also worked there?).
It can be tracked during your background check (using SSN). They will make you sign a form that you authorize them to perform such a check. Fail to sign the form - job offer is rescinded. Again, depends on employer.
> It can be tracked during your background check (using SSN). They will make you sign a form that you authorize them to perform such a check.
Can you show me a background check service that offers a list of previous employers found by SSN? I did not know that exists. Unless they're consulting the IRS, I don't know how it could exist.
Background checks as I understand them, tend to check things like: credit score, contacting references (that you provide), criminal records etc. Primarily publicly available information.
Had one done, received the packet and they had everything going back to my internships. I think many large employers voluntarily report the info to an employment verification service for mutual benefit.
You can check your own for free. Employers buy in bulk. Mine is completely accurate and includes full and accurate W2 info, i.e., salary and bonus (not stock grant) history to the dollar. Lying on a resume is generally a bad idea.
But isn't employment in the US largely at-will? Meaning that the employer can fire the employee for any reason except for protected classes discrimination?
So it doesn't matter if it's fraud or the employer just doesn't like the employee. The implications are the same.
(Essentially) everything’s a fireable offense in the US. And if you don’t get caught, there’s no risk.
If someone’s the kind of person to work 2-full-time jobs simultaneously then I think they’re the kind of person who’s OK hiding some of the facts on their resume.
Income information on your credit report is self-reported. You will notice that your credit card company asks periodically if your income has changed. That’s where it comes from. It is also non specific, an estimate of total income from all sources not just wages on one job. Perhaps you are independently wealthy with multiple income streams. No one will no the difference.
The work number (by equifax, a credit reporting agency) may report it though assuming your employer participate and gives them your pay and employment info.
Thousands, if not millions, of people have multiple jobs at the same time. Granted most of those are not 6-figure white-collar office workers. But even in that world many consultants effectively are working multiple jobs simultaneously. Personally I am very happy having one employer at a time, but I don't understand why it should be an aberration to have more than one.
Agree! At least in the US, this kind of total comp is possible at my employer (Datadog) and many other public companies, not just FAANG mega-corps. Typically you’d have to be “senior” or “staff” engineer, or get lucky and join during a period of stock growth. The pandemic really changed things to make remote work more viable. Previously many companies limited it to exceptional cases (long tenure in-person followed by the move to remote).
How realistic is it to get hired fully remote at this kind of comp if you don't live in the US? I'm British and live in the UK and I'm pretty sure I have enough experience to be making these kinds of high salaries if I lived in the US. Relocating isn't an option for me, at least not in the next few years, but I wonder, am I a fool for taking a UK-based job? Should I find a remote position with a US-based company and double my salary? Is that even possible?
I'm UK based. Just took a fully remote job at Couchbase. Left the BBC, which is attempting to reintroduce office based working, same role/title, 66% salary increase. Very possible, could even say easy.
Quite realistic. Working for a small team, we are desperate to hire. I think the trick would be to look for a smaller employer in one if the US tech hub cities and then if they can work with you on the time difference, you should v ed pretty good.
My current company has interviewed 3 ppl in 6 months, lack of candidates. Someone good, but in the wrong timezone would be a compelling hire.
You have to go the employer website or get lucky finding the listing on 'indeed' or something like that. Otherwise, you need to be contacted by the recruiter the company is working with, and the recruiter is unlikely to go beyond LinkedIn and other local talent. That is probably where the disconnect is.
1. The position was actually recently filled. We likely will have another opening soon but the posting is not yet up (perhaps will be in a month or two).
2. It would be personally identifiable
Trying to even find examples of such job postings... I think there is a market fit for a new job search website, it should be far, far easier to find these kinds of jobs postings. I'm not sure how a person can find these things without a recruiter contacting them.
Feel free to email me, I would be happy to refer someone. The pay would be somewhere in the $140-$170k range. It is a good company, tiny team working in biotech and oncology. Feel free to email me and I can share details.
$150 per hour is $300,000 per year including two weeks vacation per year.
I have a side client that I met 11 years ago that I charge $150 per hour for remote development. They feel lucky to get that rate! Most people around us charge $200 per hour but since I work full time for someone else and can’t always be available I give them that discounted rate.
I don’t think they’re hard to find at all for consulting. Being a full time employee for $250k, I agree with you that those are more rare. In my experience you have to possess an in-demand specialty for that or get into management.
2 weeks vacation per year is pitiful. Do people really get on and are happy with only that? I get 5 weeks ( minimum legal in France), i use it to the max and it's okay, but sometimes insufficient.
2 weeks (as in 10 non-holiday days) is pretty normal in the US, even if you get more. I get 4 paid but I barely take two and bank the rest. My European parents think I'm crazy but they're used to a pretty nice safety net when you get old, and the concept of early financial independence never entered their mind.
There is a curious symmetry in that the idea that you only do certain things when you are young(er) or may not live (or be healthy enough) to harvest (or enjoy) the fruits of your early financial independence does not seem to enter the mind of many people chasing this.
In my thirties I worked in many different countries for many different companies. Going new places with different cultures and being able to enjoy my time there was always the main driver: i.e. experiences & work/life balance over salary.
I would never trade these experiences for early financial independence at maybe age 50. I think there is a best before date for some experiences in life.
Maybe now it is possible for a select minority to have both. But most of of my friends in their 30s who work 'normal' jobs and have this early financial independence aim it doesn't hold true.
I.e. they will simply not have made these experiences when they reach that goal. Few have ever managed to leave their country of birth for anything else but holidays.
Some personal examples:
Living & working in Japan and thereby traveling the country on weekends or going to a cool club in Tokyo. When you're 35 vs when you're 55. Would you even do the latter at that age? Would it be the same?
Living and working in India and thereby going for a weekend hiking trip in the western Ghats were you're sleeping in an abandoned train station in the middle of the jungle. When you're 35 vs 55. Would you even do the latter at that age? Would it be the same?
Living and working in Sydney, going to a party of friends on a yacht on Friday after work and on a diving excursion to the Great Barrier Reef on Saturday morning when you're 35 vs 55. Would you even do the latter? Would it be the same? I was still hung over when I put on the diving gear but it was ok. With almost 55? You would simply have to skip the diving trip.
None of the above are made up. The pandemic-related lockdown made me realize what rich tapestry of experiences my past life choices have afforded me.
I have four people in my circle of friends who are actively working on early retirement. They do 'compensate' a lot on the weekends and when they go on holidays but that is not the same as the above.
I don't disagree, and yes I am choosing to optimize for early retirement. Another reason that may not be obvious to non-US people is that PTO in many cases is cash money, especially if you can accrue and roll it over. If you used before you hit the cap you're leaving money on the table. Twice when I quit my job I got an extra month of salary.
10 total days off would be below normal. Usually, vacation time is quoted as an addition on top of normal holidays like Christmas and Thanksgiving and other days.
Average professional job has about 8-9 paid holiday days, plus vacation time on top. My worst number of vacation days was 10 at my first job right out of college (they had to change after they struggled to attract employees) but every other job has been more than that.
But only accounting for 10 unpaid days per year would barely cover minimum federal holidays, so it’s not realistic. It’s equivalent to saying you’re never going to take time off unless the company is shut down for a federal holiday.
I'm quite sure the five weeks he mentioned don't include official holidays. In the Netherlands it's also five weeks on top of a number of official holidays, and we gave the lowest number of those in the EU (7 iirc, some of which may be weekend Sat's in some years, like Christmas now).
Of course good companies typically don't offer only the minimum.
272 days is very high. Full time work in the US with 0 vacation (typically is 10-20 days) and 0 company holidays (typically is 5-15 days) is 250 days. Perhaps you mistyped?
A lot of people are quite happy working, quite happy with their local environment, and feel no need to take a vacation. For other uses of (paid or unpaid) days off (being sick, funerals, important kid events, 'just not feeling it today', maternal leave, paternal leave, whatever) policies vary so much from company to company and individual to individual; I think this variability is a good thing and gives an additional dimension for companies to compete for workers on.
2 weeks makes the arithmetic easy (as you work 50 weeks in a year and 50 is an easier number) but I think it’s not really relevant: you can just plug in a different number of weeks or hourly rate and get your own answer.
As a blanket statement, I think that's ridiculous.
Hourly is a good choice for contracts where they are looking to buy labor. Which is a common model, because they often see contract labor as a substitute for employee labor.
The other models you mention can be much better, but also require the contractor to have both particular skills and enough relationship power to make them work. I have seen well-meaning developers absolutely get screwed on fixed scope contracts. And I've also seen less-well-meaning developers absolutely screw their clients on fixed price contracts. This is an area where blanket statements are harmful.
You can’t do hourly in London, the lowest you can go is a day rate, hours being 1:1 with fees is a great way to leave money on the table as a contractor. As a contractor you want to structure your deliverables on your terms so you can choose how the spend your time. Alan Weiss wrote a lot about this and his writings changed my life. Also, if you’re hourly in London you can’t claim to be independent and you’ll get smashed on tax as HMRC will treat you as a perm employee because your client controls your hours and activities.
How do clients get screwed with fixed fee? Clients should pay for value, not hours sat in a chair.
There are plenty of ways to screw clients with fixed-fee projects. The most common is to ask the client what they want, write that down, and build it for a fat fee based on the value they imagine they'll be getting. It turns out clients mostly don't know shit about what they actually need. Indeed, for many projects it's impossible to know the right thing to build up front, as much of the data is unavailable until you start shipping things. So what they sign up for and what will actually help them can diverge wildly.
Now that you have shipped the technically correct but not very useful thing, you collect the fee and then start accepting "change orders" at a punitive rate. At this point switching to another contractor will be even more risky and expensive, so they'll probably just suck it up. Or if you're really good at the game, you then negotiate a whole new fixed-fee contract with a higher price tag, and the deliver what they now think they want.
Bonus points if, as I've seen a big-name global contractor do, you deliver something not even barely working but possibly conforming to specs, and then just walk off the job. Even though the client has contractual obligations that they can't fulfill if the software doesn't work. At that point, the client realizes that a) they still need the software, b) the big-name contractor is the only who can deliver in time, and c) suing is risky, will take years, and anyway the big-name contractor can afford more lawyers. In this case the client signed another multi-million dollar contract with the big-name contractor, easily doubling the "fixed" fee. I lost touch with my contacts there before the thing ever worked, so I don't know how many times the big-name global contractor pulled this off on the same job.
And the clients aren’t to blame? Some will force waterfall on you then change their minds on requirements, am I a charity that just gives work away for free when they change their mind?
Many large companies absolutely refuse agile delivery and require fixed scope and cost to get anything done.
> "fuck the clients, they deserve to get cheated".
Why use quotation marks for something I didn't say? Nothing I've said means "fuck the clients" unless you are maliciously taking the worst possible interpretation.
A change that takes a massive amount of time and effort isn't something I should do for free.
I'm more than happy to build a backlog, refine it, and build until there's a RC... so few enterprise clients want to subscribe to the perceived risk, they'd rather spend months specifying everything upfront to make some senior person happy whether that delivery methodology has been proven to work or not.
> Clients should pay for value, not hours sat in a chair.
I think the implication is that if one party is capturing the excess value produced disproportionately, that is screwing the other side. Particularly if this occurs because of information that is asymmetric in negotiation.
If that’s the case, getting screwed is pretty common.
If my SAP implementation is going to save over 1 million per year in increased manufacturing efficiency, how should I price my services? The floor is set by the cheapest contractors in my market, the ceiling is how ever high I can negotiate.
The client will capture far more value than me over the lifetime of the product. I also don’t want to charge by the hour because there’s a conflict of interest and I want to detach hours worked from fees charged otherwise I’m just slaving away.
Hourly is for blue collar work, it’s not professional at my and your level.
It really depends. In general I prefer charging by the task but that assumes a well-scoped and predictable task. That works for some things and not for others.
Of course, there are a number of professions (law, accounting, etc.) where hourly charges are absolutely the norm. I've done some legal work and it was in some ways very nice to get paid whenever you were "on the clock."
I agree with Alan Weiss, lawyers are unprofessional and mostly terrible at maximising income. They charge 1:1 hours to fees which is a bad deal for a professional.
The legal work I did was for an expert witness case as a subject matter expert (not a lawyer). There is no way we could have/would have agreed to a fixed fee up front unless it was for a really outrageous amount. (Well, it ended up being a pretty outrageous amount anyway but there's no way we could have reasonably scoped the work.)
Most of the work we did in general was for specifically scoped deliverables and we actually tried very hard not to do day rates, much less hourly rates, but this was one case it really wasn't avoidable--and, of course, was the way the white shoe law firm operated.
The point is that we would have had no way of pricing "value" up-front. It wasn't our primary business (which we mostly did price based on value). So charging $500/hour (or whatever it ended up being) made a lot more sense for everyone than just throwing a $100K invoice out there when we really didn't have any idea what sort of time commitment we were looking at.
Why? Money doesn't give you time back. I guess I understand if someone is banking money to retire early but personally I've always taken every day off I could.
That’s what the person you’re replying to means as well, five weeks or 25 workdays. I think all or at least most of the EU have more than 15 days minimum mandatory paid leave.
$150 per hour consulting is not the same as $150/h salary. With consulting you have to pay for your downtime, the time you use to acquire clients, your insurance, etc.
If I was doing full time consulting I would charge $200 per hour.
I only give the discounted $150 per hour rate because I work full time at another company.
Since someone else brought up tax advantages - I don’t pay social security tax on my self employed income. Because I max it out on my full time job. I also have an Individual 401k plan that I can contribute 20% of my self employed income as the employer contribution. I can’t contribute my self employed income as the employee contribution though because I max that out at my full time job.
Having combination W2 and 1099 income gives a ton of tax benefits.
It is especially not the same due to loss of tax advantaged benefits like health insurance ($20k+ per year if you have a family), 401k matching ($10k+), DCFSA and HSA matches ($5k), and then the 8% FICA taxes up to $10k that have to come out of your pocket.
What these comments ignore is that, if you form an LLC for your consulting work you have access to a massive number of deductions that do not exist for someone who is an employee. My recommendation is to have a conversation with a good accountant and have them quantify the potential differences for you.
That's all stuff you can calculate and price into your rate. It's not like you just take the salary number they offer and divide it by two to get your rate.
Sounds like he has a steady client that accommodates as many hours as he likes at that rate, and has done so for a dozen years.
I imagine he has covered his business development expense by now.
This is how I do it too, by the way. Long term relationships with good companies. It's more like contracting, but without the 40h expectations of a contractor. ( Unless I feel like working 40 hours in a given week for some reason).
> Sounds like he has a steady client that accommodates as many hours as he likes at that rate, and has done so for a dozen years.
It sounds like he’s basically been employed by this one company for 11 years, albeit on a contract basis.
These positions exist, but they’re not all that common. Usually if a company is paying a single person a premium for many years they’ll just hire a full-time person and be done. The average freelance contract you find should not be assumed to be a decade-long opportunity.
> I have a side client that I met 11 years ago that I charge $150 per hour for remote development.
That's not too surprising, and depending on what you are doing might be a great deal for everyone. Usually contracting work out is done at 1.7-2x the rate you'd pay an employee. This is because the the consultant has costs and risk that an employee does not. Costs like insurance, accounting, legal, personal benefits (i.e. savings to allow for vacations, healthcare), sales overhead (consultants have to keep finding new clients). Risks like contract cancellation and getting paid on time.
> I don’t think they’re hard to find at all for consulting.
You said you found your $150/hr 11 years ago. How many other $150/hr clients have you met since then? What makes you say that it’s easy to find them?
I think it’s easy to say that consulting is easy when you’ve had a single, long-term client that pays well. In practice, it’s much harder to find these clients when starting from 0, unless you have such luck to find the dream client right out of the gate.
I was self employed for five years many years ago.
It’s easy to find clients - one of the best ways I did it was to go to computer stores and tell the salespeople if they got me a new client I would pay them $15 per hour in perpetuity for every hour I charged the client. I had 3 people that made more from me than their regular job.
Then there are chambers of commerce, LinkedIn messages and frankly just putting yourself out there. I met my long term side client studying for a certification while my oldest son was at a baseball clinic. My client saw the book I was reading and walked up to me and said, “Are you in IT?”
$150 / hr as a 1099 Contractor, is more like $75/hr has a W2 employee after you factor in employee benefits (normally 30-40% of your total comp) and taxation (10-15% more for self employment depending on your deductions)
If you’re doing it as part time to your full time job, it’s a bit more. The taxes are a little higher, but you’re already getting benefits from your full-time gig
I could not disagree more. Public companies will give you $X amount in stock. In writing. With specific vesting periods, etc. Obviously if the stock goes up or down so does your pay. But there’s no real way for companies to game this against you.
Nearly Every highly paid SWE in the US takes a significant amount of their pay in equity. As an anecdote - I take around 70% of my pay as equity and so does everyone I work with.
Public companies will sometimes tell you $X amount of stock and not tell you the number of shares, which is what actually matters. For the purposes of the offer, the dont generally use today’s market price as their price per share. In those cases, you can actually end up with less than is offered.
And in pre-IPO companies that’s the norm, but that’s beside the point.
They will always tell you $X in stock, how else would they value it? But there will be a set date on which that $ amount converts to a number of shares, which then vest over time according to a schedule.
I have never seen an offer from a public company that has a # of shares attached to it. Only a dollar amount. Then it converts based on market value at conversion time.
Every grant I received had exactly how the number of shares would be calculated. Typically a trailing 10 day average as of the closing on a specific date.
Don’t know why this is being downvoted, this happened to me. Company IPOd and didn’t really know what to value their stock at yet because it was so volatile so they offered me $x with the exact number to be deterred after a few months
Getting $100k sticker price worth of stocks per year is worth about $100k a year. If stocks go up they are worth more, otherwise less. On average they will be worth more than cash, and for a big company it is rare for them to go down a lot, so I'd say that getting the $100k worth of stocks a year is at least as good as just getting the cash.
Edit: Not sure why people think otherwise. Maybe they are used to companies where you have to pay money to get those stocks? Big companies gives them to you for free, there is no exercise cost.
This claim is patently false. If you receive $100k in cash, you can immediately exchange that to $100k in public company stock. The opposite is not true (if you receive stock with a vesting period, you cannot immediately exchange it to cash). Therefore, getting cash is at least as good as getting public company stock, not the other way around.
You're missing the most important benefit: pre-vesting appreciation.
Say you are granted $600k that vests over 4 years. Well lucky you, the stock has 1.5x after year 1, doubled at year 2 and tripled by year 3! That means you've cumulatively vested $225k at year 1, $525k at year 2, and $975k at year 3. If you had cash only compensation, you would have received a total of $450k for that same time period.
I feel like this is the most illuminating comment in this thread, so, thank you.
That said, if I can choose between receiving $600k in cash today, and receiving $600k worth of public company stock today with restrictions on when I can sell it, then I will choose the cash, because it is worth AT LEAST AS MUCH as the public company stock (because, again, cash is freely exchangeable to public company stock without restrictions, and the opposite does not hold true in this hypothetical).
If you feel that there's a good chance that the stock of the company you're working for is going to tank, take that as a sign that you should work somewhere else ;)
> If you feel that there's a good chance that the stock of the company you're working for is going to tank, take that as a sign that you should work somewhere else ;)
If you get $600k in cash, and you immediately exchange that into $600k in company stock (with no restrictions on when you can sell that stock), how could that possibly be a worse deal than getting $600k in company stock with restrictions on when you can sell?
Seems like a strawman, as no company is giving you the cash as a lump sum payment like that up front. Even if you get the option, which mostly you don't, it's between:
1. A grant at $Xk, converted to shares on start date and vesting proportionally over 4 years
or...
2. A salary bump equivalent to the grant in (1), paid out ~bi-weekly at (1/104)*$Xk. 104 being the amount of bi-weekly pay periods to occur over a 4 year span.
It's not a strawman, it's a direct response to grandparent comment in this thread, who said:
> getting the $100k worth of stocks a year is at least as good as just getting the cash
I am arguing that getting $100k worth of cash is always at least as good as getting $100k worth of stocks. You're saying that it's not realistic to have the option to get cash instead of stocks, and that's true but it's besides the point.
As soon as your RSU vests, you can sell it for cash. Most companies offer an auto-sell option that works even during restricted windows. With a good vesting schedule, it's almost identical.
You're completely wrong because of your neglect to consider pre-vesting appreciation. Please see my previous comment for an example. Why do you think some people get rich joining pre-IPO companies? Because they're granted a lot of shares at a low price point, and by the time they are vested and liquid the shares have a possibility of being worth magnitudes more than when they were granted.
It’s not at least as good as stock, it’s worse in most markets. Because your stock is appreciating before you’re allowed to sell it but the cash is depreciating to inflation.
If you receive $100k worth of stock, you receive $100k worth of stock. If you receive X amount of stock that vests in 1 year, and at that time point it happens to be worth $150k, then you didn't receive $100k worth of stock, you received $150k worth of stock. The question wasn't about comparing $150k worth of stock to $100k cash, the question was about comparing $100k worth of stock to $100k cash.
Every company I know of with the exception of Stripe and Coinbase have 4 year equity grants. In the real world you'd receive a 400k a grant that vests over 4 years. For most white collar workers who don't need the money to pay bills the 400k grant is worth more than an extra 100k a year in salary.
It's a free call option on the stock. If it goes up you keep vesting at the new stock price which might be way above market rate for you position and if it goes down you get refreshers at the end of the year to bring you back to a market rate salary.
If it's about timeframes it can be thought of as like a year end bonus being paid out when it vests. With some risks in terms of share price (which is like variable cash bonuses). The only reason most prefer cash is because it's a hard number that base increases/bonus are computed by and for negotiation in next job.
Kind of irrelevant because you will likely never receive a cash comp package equivalent to your salary + RSU amount. If it were that simple, virtually everyone would take the cash.
This entire thread is discussing the hypothetical where you could exchange your stock comp to cash. People upthread were claiming that the stock is more valuable, even though cash is exchangeable to stock without limitations, and the opposite is not true. You yourself said "virtually everyone would take the cash", so I take it that you agree with me.
I think you misunderstood, it's not that stock is more valuable, it's that you should opt to cash+stock because the total value of this will be higher than a pure cash offer. Essentially, cash and public stock is the same to an emplloyee, but for companies, paying in stock is better for them.
Let's say you know you will get a bonus that pays out end next year worth 10k. You can chose to receive 10k cash or 10k of google shares at today's prices. Most would trade the risk for potential upside.
When you get an offer of $100K cash + $100K in stock, that's before appreciation. So 3 years from now your equity is appreciated but your cash is not, so you get $225K in cash equivalent.
This is false. If you immediately exchanged your cash to stock (as I specified in the post that you are replying to) then 3 years from now your "cash" option is worth exactly the same as your "cash + stock" option.
No one is giving you 4 years of paychecks on day 1. But they do grant 4 years of equity that is appreciating while you’re waiting for it to vest. That’s the difference. Cash is worse.
This is wrong. It would be true if you received all the cash in a lump sum as soon as you're hired, and you used it to buy stock, but if your cash "vests" in the same way as equity typically does then you'd lose out on the opportunity for it to appreciate before vesting like shares can.
It’s weird to say this though. Because stock comp is purely additive in almost all cases. The amount it adds to your pay is variable, and in extreme circumstances can even be $0. But it’s not like you can really lose money because of equity based pay, under normal circumstances.
You could be compelled to accept a lower salary with the expectations of stock being worth lots of money then it actually (as is the usual case) ends up being less than salary would have.
I mean this scenario only happens at just about every startup if you read peoples experiences though I don't know if there are or if its possible to have a study done on this since the data is likely private.
3 years receiving vested stocks. If price stayed the same, it would be worth 200k. Today it is worth 80k. So no, thanks. Stocks are not worth unless you're FAANG
Incredibly untrue. I’m sorry that your particular company saw a 60% decrease in stock price over 3 years. But this is not the norm for any reasonably healthy company.
I think many people on HN may be too young to remember the early 2000s, when you’d kill someone for your stock price to be down only 60% over 3 years, but it absolutely happens to good companies too.
We can talk about normal expectations without having to explicitly state that black swan events can happen. If you took a stance of “I’m not going to take any pay in equity because I saw what happened in 2001” you would have left millions of dollars on the table over the last 20 years.
? I’ve been in this industry for…a while. I watched people around me packing up their cubicles in 2001. What is it that you think I am missing? Genuine question because I’m not sure how to interpret your comment at all. Tech stocks have had strong growth as a sector for about 2 decades. Even if they hadn’t, even if they had been flat for 20 years, companies are still paying out $100k+ a year in equity (in addition to base salary).
I thought I was going to be rich with my first job at a startup out of college but the dot com bust basically made it all worthless. Stock is great but cash would have been better.
You aren't guaranteed your salary either though and in many of those cases in the 2000's workers were laid off. Being paid entirely in cash salary doesn't make you immune to market turbulence.
Fully concur. I recieved stock appreciation rights (SARs) as a bonus at one company for a few years. CEO drove company into the ground that effectively wiped out all of these SARs. I was bitter at the CEO for making stupid decisions, but not at the fact that my bonus was in the form of SARs. If I'd have stuck to my guns more, the company would have probably succeeded and the SARs could have had significant value.
Bottom line, with stock payment, you have a say in their ultimate value. Do good work, company value invreases, you enrich yourself.
It's hard to believe that your lack of contribution tipped the scales so the company failed. Doing good work, in itself, doesn't increase the value of the company.
No this is actually true. Most stocks do go down (or at least only match much less risky investments like short-term bonds), but the stock market goes up because some stocks go up a lot. This is why all investors diversify. For example, the Russel 3000 Index goes up ~10% a year because they remove bad stocks and replace them with ones that seem better. But, employment at a single company with stock-based compensation is a concentrated bet on that single stock during the employment timeframe.
I agree the stock market has positive skew but in your career you will have enough bets to smooth out the effects of betting on a single stock. Additionally, you're not really making the same bet as an equity investor because your bet has optionality. Your downside is capped at less than a year in loss earnings because if the stock goes down and the company cannot bring you back up to market rate you just switch companies. If the stock goes up, you enjoy 4 years of above market compensation before getting reset to market rate.
I've never been in the situation of a significantly down price over more than a year. Is it normal that the firm will give 'refreshers' to get back to the target comp in that case?
The stocks vest progressively. You don’t literally have to wait 3 years to cash out.
If you can’t afford a single but if variance then I guess RSUs won’t make you happy. But for everyone else they work just fine (unless your company goes down in flames, in which case you have bigger problems and are probably job searching anyway)
If the stocks go down before they vest you can just leave for another company and reset your compensation to the normal level, it isn't like the contract says you have to stay.
If you keep the stocks after they vest then that is your fault for keeping them instead of selling them.
You seem to be confusing RSUs typically issued by public companies as part of total compensation with options used by private companies, which often amount to nothing.
Like everyone else is saying, you want publicly traded equity - Amazon, Google, Shopify, etc that you can convert to cash, usually in the first year or three. Not the lottery tickets that startups hand out.
RSUs are almost the same as a regular paycheck, and in my experience the employer has a lot more flexibility to meet your demands when you're negotiating total comp. So yes, the stock could go down, but you're getting more when you start than you would in salary and if doesn't go down you pocket the upside.
The vesting schedule is where you need to be careful.
The trick with equity isn't about making it big at IPO. That rarely happens for most. Go to an established company that does stock RSUs and if you prove your worth the the RSUs will follow. They can be worth a lot from established "boring" companies.
Adobe, Oracle, Salesforce, IBM, SAP etc... You also have the arguably less boring but equally stable and more lucrative options like Google, Facebook, Amazon, Apple.
the only scheme i've seen in post ipo equity (rsu-s) is that you are given a cash amount that is converted to shares at current price, then the shares vest over time. If the shares go up you get more cash. Assuming an average company (ie tracking the total market) and an average return this is going to be better than cash.
