4 ms·

I don't know if it's still true, but Netflix supposedly offers a really high base salary with no equity. I think the logic is that you can just buy the stock yo

by zawerf 7y ago

I don't know if it's still true, but Netflix supposedly offers a really high base salary with no equity. I think the logic is that you can just buy the stock yourself with the higher salary if you believed in the company enough to want equity.

the_watcher 7y ago
Netflix still does this - they pay top of the market in cash, no stock, and encourage employees to bring them competing offers so that they have even more hard data on what the top of the market is for a Netflix employee. They also have an ESOP, so you do still have some privileged access to the stock.
jedberg 7y ago
That's not exactly how it works. They give you a total comp number, and then you choose the cash/equity ratio yourself, which you can change each year. A lot of people chose the all cash option because they didn't understand there equity option, so they changed it to give everyone a little bit of equity regardless, but you can still opt to get extra equity in lieu of cash, and change that election every year. I think it is an amazing plan. I was able to choose more equity because I had a working wife and no kids. Others chose more cash. One guy chose 100% equity, and is now retired.
- hnbroseph 7y ago
  > One guy chose 100% equity, and is now retired. being able to choose 100% equity would suggest a particular level of financial independence before even starting. how long did they work without a salary? did they regularly sell equity as a salary-replacement?
  - chucksmash 7y ago
    Or perhaps a working partner and a willingness to get by on one income. Know a couple who did this in NYC for a couple of years on non-dev salaries and the trade-off definitely opened doors for them.
    - underwater 7y ago
      How is this any different from taking your entire paycheck and dumping it into a single stock each month? It's effectively a gamble, and often employees are too emotionally invested to make a rational financial investment of that scale.
      - jedberg 7y ago
        It was a gamble, but we had a lot of leverage because we got major discounts with pre-tax money.
  - jedberg 7y ago
    He lived off selling his Google stock, where he worked before Netflix. :)
- charlesdm 7y ago
  Don't you pay tax when you actually get the equity? How is it different to getting cash and then just buying the stock?
  - tedsanders 7y ago
    It's different in that at Netflix the equity comes in the form of non-transferrable 10-year options which do not trade on any market. Furthermore, the option premium is estimated by Netflix at fixed at a constant value, rather than being set by a market. If it was straight stock, then yes it would be rather equivalent to getting cash and then buying stock right away.
    - repsilat 7y ago
      > If it was straight stock, then yes it would be rather equivalent to getting cash and then buying stock right away. I guess this is purely academic for Netflix, but one difference in other companies is that the grant is made ahead of time, and the stock price can rise or fall before it vests. If (say) you expect the stock to rise with the market, and you expect the market to rise at 7% a year, you might also expect your income from vesting stock to also rise at 7% per year over the vesting period (typically four years) regardless of any raises or promotions. I have heard of some companies adjusting subsequent grants based on changes in value of invested stock, though. I think policies there vary.
- readams 7y ago
  Netflix stocks are totally insane, as you're not really getting stock but instead a complex leveraged financial instrument in the form of an call option, that you have to pay for based on a Netflix estimate of the option premium.
  - jedberg 7y ago
    Yep that’s why they switched it to giving everyone some equity. But those of us who understood the financial instrument being offered dis really well for ourselves.

by zawerf 7y ago

the_watcher 7y ago

Netflix still does this - they pay top of the market in cash, no stock, and encourage employees to bring them competing offers so that they have even more hard data on what the top of the market is for a Netflix employee. They also have an ESOP, so you do still have some privileged access to the stock.

jedberg 7y ago

That's not exactly how it works. They give you a total comp number, and then you choose the cash/equity ratio yourself, which you can change each year. A lot of people chose the all cash option because they didn't understand there equity option, so they changed it to give everyone a little bit of equity regardless, but you can still opt to get extra equity in lieu of cash, and change that election every year. I think it is an amazing plan. I was able to choose more equity because I had a working wife and no kids. Others chose more cash. One guy chose 100% equity, and is now retired.

hnbroseph 7y ago
> One guy chose 100% equity, and is now retired. being able to choose 100% equity would suggest a particular level of financial independence before even starting. how long did they work without a salary? did they regularly sell equity as a salary-replacement?
- chucksmash 7y ago
  Or perhaps a working partner and a willingness to get by on one income. Know a couple who did this in NYC for a couple of years on non-dev salaries and the trade-off definitely opened doors for them.
  - underwater 7y ago
    How is this any different from taking your entire paycheck and dumping it into a single stock each month? It's effectively a gamble, and often employees are too emotionally invested to make a rational financial investment of that scale.
    - jedberg 7y ago
      It was a gamble, but we had a lot of leverage because we got major discounts with pre-tax money.
- jedberg 7y ago
  He lived off selling his Google stock, where he worked before Netflix. :)
charlesdm 7y ago
Don't you pay tax when you actually get the equity? How is it different to getting cash and then just buying the stock?
- tedsanders 7y ago
  It's different in that at Netflix the equity comes in the form of non-transferrable 10-year options which do not trade on any market. Furthermore, the option premium is estimated by Netflix at fixed at a constant value, rather than being set by a market. If it was straight stock, then yes it would be rather equivalent to getting cash and then buying stock right away.
  - repsilat 7y ago
    > If it was straight stock, then yes it would be rather equivalent to getting cash and then buying stock right away. I guess this is purely academic for Netflix, but one difference in other companies is that the grant is made ahead of time, and the stock price can rise or fall before it vests. If (say) you expect the stock to rise with the market, and you expect the market to rise at 7% a year, you might also expect your income from vesting stock to also rise at 7% per year over the vesting period (typically four years) regardless of any raises or promotions. I have heard of some companies adjusting subsequent grants based on changes in value of invested stock, though. I think policies there vary.
readams 7y ago
Netflix stocks are totally insane, as you're not really getting stock but instead a complex leveraged financial instrument in the form of an call option, that you have to pay for based on a Netflix estimate of the option premium.
- jedberg 7y ago
  Yep that’s why they switched it to giving everyone some equity. But those of us who understood the financial instrument being offered dis really well for ourselves.