3 ms·

Options do not seem like real wages to me because unlike RSUs I’ve never been able to translate them to cash. You’re totally right. And with future expected val

Options do not seem like real wages to me because unlike RSUs I’ve never been able to translate them to cash. You’re totally right. And with future expected value of options decreasing (and RSUs), base is more important than ever.

TimPC 4y ago
Base is important but tricky to get a large proportion of. You can negotiate some increase in base but if you want to go too aggressively getting a lot of it will lower total comp. The fact is companies pay base with cash on hand and pay options by issuing new shares. Issuing new shares doesn’t feel like real money in the same way to a lot of corporations so they are happier to do that. I agree markers are currently on a downward trend but I think RSUs are still a valuable portion of compensation. Even if they end up worth only 70% of their initial value you can get a larger total comp from a mix of RSUs and base than just base. Options on the other hand are largely vapour in modern markets. Many start-ups are electing to stay private for time periods exceeding fifteen years. They fully expect most employees to not be able to afford the options they get because of the tax implications combined with limited ability to sell. Some services exist to try and alleviate this problem although most do so imperfectly and take a large premium for the risk and uncertain time window for the shares to become publicly tradeable. These days I mostly don’t bother looking at companies that can only offer options because they generally aren’t willing to offer a high enough base to compensate. I’d far prefer $200k base and $200k RSUs to $300k base and $100k of uncertain options. The first offer is far easier to find than the second as very few start-ups are willing to raise base to compensate people for the lack of liquidity in their options.

3 ms·

Options do not seem like real wages to me because unlike RSUs I’ve never been able to translate them to cash. You’re totally right. And with future expected val

by dc-programmer 4y ago

TimPC 4y ago
Base is important but tricky to get a large proportion of. You can negotiate some increase in base but if you want to go too aggressively getting a lot of it will lower total comp. The fact is companies pay base with cash on hand and pay options by issuing new shares. Issuing new shares doesn’t feel like real money in the same way to a lot of corporations so they are happier to do that. I agree markers are currently on a downward trend but I think RSUs are still a valuable portion of compensation. Even if they end up worth only 70% of their initial value you can get a larger total comp from a mix of RSUs and base than just base. Options on the other hand are largely vapour in modern markets. Many start-ups are electing to stay private for time periods exceeding fifteen years. They fully expect most employees to not be able to afford the options they get because of the tax implications combined with limited ability to sell. Some services exist to try and alleviate this problem although most do so imperfectly and take a large premium for the risk and uncertain time window for the shares to become publicly tradeable. These days I mostly don’t bother looking at companies that can only offer options because they generally aren’t willing to offer a high enough base to compensate. I’d far prefer $200k base and $200k RSUs to $300k base and $100k of uncertain options. The first offer is far easier to find than the second as very few start-ups are willing to raise base to compensate people for the lack of liquidity in their options.