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Netflix pays their software engineers huge salaries because stocks and bonuses are not a significant part of their compensation. Stocks are not a significant pa

Netflix pays their software engineers huge salaries because stocks and bonuses are not a significant part of their compensation. Stocks are not a significant part of their compensation because the culture at Netflix - at least what they promote externally - is that they are a high-performing team, and players may get cut next year. In that kind of environment, stock which takes time to mature is not attractive. Bonuses imply doing more, but again, their culture is that everyone is a higher-performing player. Base salaries at the other FAANG companies is lower because stocks and bonuses are a significant fraction of the total compensation. But total compensation is similar for all of them. I thought this was common knowledge? Reference: https://www.levels.fyi/?compare=Amazon,Apple,Netflix,Google,Facebook&track=Software%20Engineer https://www.levels.fyi/?compare=Amazon,Apple,Netflix,Google,...

hintymad 6y ago
That's not true, and probably the biggest misunderstanding about Netflix. Netflix was really generous on stock options. It gave you stock options worth 5% of your salary for free. Then you can forfeit your salary for options, but here is the kick: Netflix gave your 5 times of discount. 5 times! For instance, if you forfeit 100 dollars for options and the strike price is $10, then you will get 50 options instead of 10. The general formula for profit is 4X - 1, where X is the percentage of increase from strike price. If the stock price is 25% higher than your strike price, you'll make even. If it is 50% higher, then you will double your forfeited salary. On top of that, you vest your stock options on a monthly basis, and your options expire in 10 years! Thank about it, you're pretty much guaranteed to make money as long as the stock has certain volatility, and Netflix stock is one of the most volatile stock in the past 10 years. That's how so many employees of Netflix became multi-millionaires.

hintymad 6y ago

That's not true, and probably the biggest misunderstanding about Netflix. Netflix was really generous on stock options. It gave you stock options worth 5% of your salary for free. Then you can forfeit your salary for options, but here is the kick: Netflix gave your 5 times of discount. 5 times! For instance, if you forfeit 100 dollars for options and the strike price is $10, then you will get 50 options instead of 10. The general formula for profit is 4X - 1, where X is the percentage of increase from strike price. If the stock price is 25% higher than your strike price, you'll make even. If it is 50% higher, then you will double your forfeited salary. On top of that, you vest your stock options on a monthly basis, and your options expire in 10 years! Thank about it, you're pretty much guaranteed to make money as long as the stock has certain volatility, and Netflix stock is one of the most volatile stock in the past 10 years. That's how so many employees of Netflix became multi-millionaires.