9 ms·

the good news is, 500k is indeed a floor for a lot of FAANG roles (when you factor in equity comp)

by cyan_atrus 5y ago

cratermoon 5y ago
No sane person (or nobody with more than three years in the industry) counts equity comp in with base compensation.
- influx 5y ago
  For a pre-ipo company, sure. For a company like Amazon or Facebook, you are way over generalizing.
- xenihn 5y ago
  i'm surprised to run across so many purported tech professionals who still don't know the difference between options and RSUs, and how the latter are as good as cash
  - sidlls 5y ago
    I'm not. Our industry is filled with people who have bought hook, line and sinker into the "I'm passionate about what I do and that's all I need" cult, especially in the Bay Area/startup world. They assume they're well compensated (a few are--maybe a higher fraction than in other industries, even--but most of them aren't) and don't pay attention to that sort of thing much.
- autarch 5y ago
  At a public company, equity comp is a stock grant. This has a greater likelihood of being valuable than equity in a private company, though of course the value could still go down.
- 6gvONxR4sf7o 5y ago
  At an early stage startup, no sane person counts equity comp. But at a company that’s been public for 15+ years, why wouldn’t you?
- cperciva 5y ago
  ... especially since hire-to-fire means that a lot of people will never actually receive that equity compensation.
  - jedberg 5y ago
    At Amazon in particular they pay you the cash value of your stock for the first two years until it vests and you can start actually cashing it out. They have to since they have a maximum wage of ~$170K (varies a little depending on city).
    - notJim 5y ago
      Isn't Amazon famous for clawing back starting bonuses if you don't stay for 4 years or something like that?
      - jedberg 5y ago
        I don't think so, because I think the most common tenure is just over 2 years. I know a lot of people who leave right after their second year cliff (the vesting isn't even and most of it comes at the end).
      - pawelos 5y ago
        No, the sign-on bonus is prorated monthly and you don’t pay back what you got. However, you might need to pay back part of relocation money, if you leave before two years mark.
- magneticnorth 5y ago
  At a FAANG? Why not? If the company is public you can immediately sell it for cash upon vesting, and I pretty much always do.
  - btilly 5y ago
    Consider the story that we're discussing. If you're hired by someone whose incentive is to fire you to meet a metric, then you're never going to get that equity payment. And they have every incentive to load your offer up with as much equity as they can. And even if they don't, there are lots of ways to find yourself in a toxic workplace. If you're depending on that vesting schedule, your life can suck as you're trying to wait out an arbitrary deadline. If you treat vesting as a nice optional bonus that you don't plan on, neither situation will feel bad to you.
    - awa 5y ago
      A few companies under the FAANG umbrella do monthly/quarterly vesting.
      - btilly 5y ago
        Lots do monthly/quarterly vesting. But all have 1 year cliffs. With the idea that you get nothing if you don't last. I had the wonderful experience of being hired at Google many years ago, and pulled into an SRE role. I was in the roughly half that they do that with that don't work out. And I didn't work out for exactly the reason that I initially expressed doubts about. (I don't task switch that fast - not a problem in a SWE but a major problem for an SRE.) I was let go 5 days before my 1 year cliff. That is one of the reasons why I, personally, discount equity compensation.
        what_ever 5y ago
        > But all have 1 year cliffs. Google and Facebook don't anymore. You start vesting right away.
- nicksergeant 5y ago
  Ehh... equity comp at a public company is just cash on your vesting schedule (if you chose to sell each vest).
- yxwvut 5y ago
  Why not, assuming the company is public? If you can convert to cash as soon as your shares vest (which occurs monthly in most instances) it's as good as cash (with some discounting factor for the uncertainty of the first year pre-vesting).
- jedberg 5y ago
  That's not true. It makes sense to discount pre-ipo equity at 100%, but post-ipo equity is much more predictable. I personally discount equity at 40%. So you can offer me $300,000 cash or you can offer me $150,000 cash and $250,000 RSUs and I'd consider those equal offers.
  - repsilat 5y ago
    For public companies you should value stock grants above their face value, because of the optionality: If the price goes down you can quit and get another job, if it goes up you get a raise. And stocks tend to go up, so 4-year grants have raises baked in, and most companies don't consider these raises (IIRC Amazon and Stripe do), so they still give regular raises and refresher grants.
    - jedberg 5y ago
      The discount is to account for risk. Imagine an offer that is 100% stock. If they stock goes down, your comp goes down with it. That is what is being accounted for. > And stocks tend to go up Only lately. Stock compensation sucked around 2001 and 2008.
      - repsilat 5y ago
        Risk (well, "variance") increases the value of optionality. Assume that there is a job market with lots of jobs. Each will hire you for your market-rate total compensation, no stock cliffs, no job-seeking costs. Spherical cow. Say also that you can tell the variance on stock compensation, but you can't guess at future performance. One strategy might be to go to an all-cash job and make your market rate forever. That's a lower-bound on the best expected future earnings. But a better strategy is, - Join a high-variance company, - If/when your pay drops below the market, find another high-variance company. With this strategy your expected earnings are higher than your market rate, even if the expected earnings at every job is the same. And the outperformance scales up with the variance.
        5y ago
- dfadsadsf 5y ago
  Equity is public company is as good as cash. You should absolutely count it as part of base compensation. Vesting is every 4 months and risk is minimal. If you want you can even fully deriskify by buying put options (or come up with something synthetic that mirror put options while not breaking your employment agreement). On the other hand Equity is startup is completely different thing and should be heavily discounted.
  - Twirrim 5y ago
    > Vesting is every 4 months and risk is minimal. That's not the way Amazon vests your stock, unless things have drastically changed recently. They vest in single lump sums for the year, and they have a slowly ramping up vesting schedule. First year, nothing (but they give you straight money bonus) Second year, barely anything, but they give you some cash to "offset". Third year, good bunch of the stock, but still less than half. Fourth year, all the rest of the stock vests. Within each year you should get some stock offering, on the same ramping up basis so the idea is after the fourth year, you have consistent RSUs vesting, and they'll probably be split over the year based on whenever Amazon gave you the stock offering.
    - what_ever 5y ago
      The sign up bonus over the first two years is pro-rated and paid every month and it makes up for the lack of stock vesting during that time.
  - yuppie_scum 5y ago
    Until the public stock shits the bed, like GE for example
  - compiler-guy 5y ago
    It's not as good as cash because the value can vary, especially the further out you look. It might go up, but it might go down. Cash is far more stable than that. But it still should be modeled far above zero, and far closer to cash than pre-ipo options.
  - BeetleB 5y ago
- plank_time 5y ago
  You are wrong. Companies like Facebook and Google allow you to vest shares almost immediately (I think they vest quarterly). Unless you think their shares are going to drop precipitously, it’s absolutely okay to count equity these days.
sidlls 5y ago
“A lot” is still a tiny percentage even of the engineering roles.

the good news is, 500k is indeed a floor for a lot of FAANG roles (when you factor in equity comp)

cratermoon 5y ago

No sane person (or nobody with more than three years in the industry) counts equity comp in with base compensation.

influx 5y ago
For a pre-ipo company, sure. For a company like Amazon or Facebook, you are way over generalizing.
xenihn 5y ago
i'm surprised to run across so many purported tech professionals who still don't know the difference between options and RSUs, and how the latter are as good as cash
- sidlls 5y ago
  I'm not. Our industry is filled with people who have bought hook, line and sinker into the "I'm passionate about what I do and that's all I need" cult, especially in the Bay Area/startup world. They assume they're well compensated (a few are--maybe a higher fraction than in other industries, even--but most of them aren't) and don't pay attention to that sort of thing much.
autarch 5y ago
At a public company, equity comp is a stock grant. This has a greater likelihood of being valuable than equity in a private company, though of course the value could still go down.
6gvONxR4sf7o 5y ago
At an early stage startup, no sane person counts equity comp. But at a company that’s been public for 15+ years, why wouldn’t you?
cperciva 5y ago
... especially since hire-to-fire means that a lot of people will never actually receive that equity compensation.
- jedberg 5y ago
  At Amazon in particular they pay you the cash value of your stock for the first two years until it vests and you can start actually cashing it out. They have to since they have a maximum wage of ~$170K (varies a little depending on city).
  - notJim 5y ago
    Isn't Amazon famous for clawing back starting bonuses if you don't stay for 4 years or something like that?
    - jedberg 5y ago
      I don't think so, because I think the most common tenure is just over 2 years. I know a lot of people who leave right after their second year cliff (the vesting isn't even and most of it comes at the end).
    - pawelos 5y ago
      No, the sign-on bonus is prorated monthly and you don’t pay back what you got. However, you might need to pay back part of relocation money, if you leave before two years mark.
magneticnorth 5y ago
At a FAANG? Why not? If the company is public you can immediately sell it for cash upon vesting, and I pretty much always do.
- btilly 5y ago
  Consider the story that we're discussing. If you're hired by someone whose incentive is to fire you to meet a metric, then you're never going to get that equity payment. And they have every incentive to load your offer up with as much equity as they can. And even if they don't, there are lots of ways to find yourself in a toxic workplace. If you're depending on that vesting schedule, your life can suck as you're trying to wait out an arbitrary deadline. If you treat vesting as a nice optional bonus that you don't plan on, neither situation will feel bad to you.
  - awa 5y ago
    A few companies under the FAANG umbrella do monthly/quarterly vesting.
    - btilly 5y ago
      Lots do monthly/quarterly vesting. But all have 1 year cliffs. With the idea that you get nothing if you don't last. I had the wonderful experience of being hired at Google many years ago, and pulled into an SRE role. I was in the roughly half that they do that with that don't work out. And I didn't work out for exactly the reason that I initially expressed doubts about. (I don't task switch that fast - not a problem in a SWE but a major problem for an SRE.) I was let go 5 days before my 1 year cliff. That is one of the reasons why I, personally, discount equity compensation.
      - what_ever 5y ago
        > But all have 1 year cliffs. Google and Facebook don't anymore. You start vesting right away.
nicksergeant 5y ago
Ehh... equity comp at a public company is just cash on your vesting schedule (if you chose to sell each vest).
yxwvut 5y ago
Why not, assuming the company is public? If you can convert to cash as soon as your shares vest (which occurs monthly in most instances) it's as good as cash (with some discounting factor for the uncertainty of the first year pre-vesting).
jedberg 5y ago
That's not true. It makes sense to discount pre-ipo equity at 100%, but post-ipo equity is much more predictable. I personally discount equity at 40%. So you can offer me $300,000 cash or you can offer me $150,000 cash and $250,000 RSUs and I'd consider those equal offers.
- repsilat 5y ago
  For public companies you should value stock grants above their face value, because of the optionality: If the price goes down you can quit and get another job, if it goes up you get a raise. And stocks tend to go up, so 4-year grants have raises baked in, and most companies don't consider these raises (IIRC Amazon and Stripe do), so they still give regular raises and refresher grants.
  - jedberg 5y ago
    The discount is to account for risk. Imagine an offer that is 100% stock. If they stock goes down, your comp goes down with it. That is what is being accounted for. > And stocks tend to go up Only lately. Stock compensation sucked around 2001 and 2008.
    - repsilat 5y ago
      Risk (well, "variance") increases the value of optionality. Assume that there is a job market with lots of jobs. Each will hire you for your market-rate total compensation, no stock cliffs, no job-seeking costs. Spherical cow. Say also that you can tell the variance on stock compensation, but you can't guess at future performance. One strategy might be to go to an all-cash job and make your market rate forever. That's a lower-bound on the best expected future earnings. But a better strategy is, - Join a high-variance company, - If/when your pay drops below the market, find another high-variance company. With this strategy your expected earnings are higher than your market rate, even if the expected earnings at every job is the same. And the outperformance scales up with the variance.
      - 5y ago
dfadsadsf 5y ago
Equity is public company is as good as cash. You should absolutely count it as part of base compensation. Vesting is every 4 months and risk is minimal. If you want you can even fully deriskify by buying put options (or come up with something synthetic that mirror put options while not breaking your employment agreement). On the other hand Equity is startup is completely different thing and should be heavily discounted.
- Twirrim 5y ago
  > Vesting is every 4 months and risk is minimal. That's not the way Amazon vests your stock, unless things have drastically changed recently. They vest in single lump sums for the year, and they have a slowly ramping up vesting schedule. First year, nothing (but they give you straight money bonus) Second year, barely anything, but they give you some cash to "offset". Third year, good bunch of the stock, but still less than half. Fourth year, all the rest of the stock vests. Within each year you should get some stock offering, on the same ramping up basis so the idea is after the fourth year, you have consistent RSUs vesting, and they'll probably be split over the year based on whenever Amazon gave you the stock offering.
  - what_ever 5y ago
    The sign up bonus over the first two years is pro-rated and paid every month and it makes up for the lack of stock vesting during that time.
- yuppie_scum 5y ago
  Until the public stock shits the bed, like GE for example
- compiler-guy 5y ago
  It's not as good as cash because the value can vary, especially the further out you look. It might go up, but it might go down. Cash is far more stable than that. But it still should be modeled far above zero, and far closer to cash than pre-ipo options.
- BeetleB 5y ago
plank_time 5y ago
You are wrong. Companies like Facebook and Google allow you to vest shares almost immediately (I think they vest quarterly). Unless you think their shares are going to drop precipitously, it’s absolutely okay to count equity these days.

sidlls 5y ago

“A lot” is still a tiny percentage even of the engineering roles.