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I have a job offer on the table. Executive position. Compensation package includes salary/bonuses/company shares. I'm suddenly in the deep end of the pool, and not totally sure if that thing floating over there is a Baby Ruth or a turd.
I've read a bunch of stuff at Vault, Salary, etc. Looking for real world advice. If you have any experience and insight on valuing the relative worth of salary vs. stock grants within a compensation package, PM me.
Thanks.
First question:
Is there any chance I'm about to become the unwitting fall guy in a major financial/stock scam that will resemble in any way either MCI, Tyco, or ENRON?
Cash is king. The options should only be a "bonus" in the financial picture as you look at it. If the cash amount is enough to sway you without the options than it's a good deal. If the lure is the options than you're gambling.
Stock options CAN be a very good thing...or not so good. It is important to know the company that you work for. How much confidence do you have in the success and growth of the company? Is it an industry leader? What is its up side? How much risk is involved? ALso, how long will you remain at the company? Is this IT for your career? If you plan on keeping this job for 10 or more years, and the company is an industry leader in a stable industry, then stock options can be rewarding. Wouldn't you be happy if after you worked for this firm for 15 years and became a top producer, it went public, and you received a windfall of $20,000,000.00?
Of course, it depends on the value or potential value of the company. I would probably sacrifice some salary for a large stock option if I felt like the company had potential of being successful.
Good question. Alls I know is the CEO is Tom Delay. And CFO is some guy named Abramoff.Quote:
Originally Posted by splat
You'll be fine. They own the jail.Quote:
Originally Posted by Hugh Jass
This is my general stance.Quote:
Originally Posted by truth
This is a startup, but a startup that is well-connected and well-positioned. The salary offer is lower than my current salary, adjusted for geography. There is talk of a company performance-based bonus. Stock grant vests in 6 months.
I have faith in the market, the business approach, and the current staff. But I still see the stock as a gamble. Generally, I see the stock grant and other perks as a counterbalance to the risk. I feel like the salary offer should at least equal my current salary, so I don't lose ground in hard compensation.
My current gig is pretty tight, and as such I require "an offer I can't refuse" to pry me loose.
Again, it's tough to gauge the future value of stock. So it's tough to understand where to focus my counteroffer - on salary, stock, or bonus structure.
Ask yourself WHY they are so eager to offer you stock options. What do YOU bring to the table that they are so eager to have? What makes you so important among everyone else? Not being a dick or bursting your bubble (hell, you may be the only Russian speaking alpaca doctor ithey can find for all I know) but if it sounds too good to be true, it usually is. Ask to speak to a couple C-level people. Are they cool? How long have they been around? All that kinda stuff A - makes you look smart, and B can ferret out any AmWay types that float from BS/Next big thing! to BS/Next big thing!Quote:
Originally Posted by Hugh Jass
Ask to have 5 phone numbers of people within the company that work there now, and the OK to speak with them. Then ask to shadow a guy/gal that does exactly what you would be doing, and then take them out for a beer and make them spill the company's secret cookies.
If anyone has ever been in the Mortgage Industry - fucking RUN. If any of the dudes has more than 2 rings on their fingers - RUN. If you see more than 1 set of fake titties - RUN.
And last but not least - run a D&B on the company. Talk to some of their customers.
Then for good measure, get as many people's names in management as you can, and google the shit out of their names. You'd be amazed at what you can find!
Good luck.
Are you moving to a new industry? Find out what the deal is if you are. Talk to people who have had your job for an extended period of time.
Understand very clearly what to expect, but don't ask your potential employer about comp before you understand all this. Then, in general, make sure you can live happily on your salary. It's not that you don't believe the bonus will come, but it's more about financial planning. You don't want to live on credit. And remember, reasonable demands are reasonable. Negotiate and ask for what you need.
Then look for the upside reward in addition as performance pay. And don't skimp there either. If you plan on caring more than most people, make sure your employer can match industry standard incentive pay. Plus if you ever switch jobs, you will be asked how much you made in incentive pay. If you got gyped, they might think you were a non-producing chump. Make sure you are in the upper 1/2 or 1/4 compared to your peers. And make sure this is attainable in relation to your company's performance. They should always pay you as much as they can afford. The only expection is if you are in a major learning situation - then make sure you are paid in line with other trainees at the best firms.
We are posting the same time... As far as stock goes: I'm in the industry (finance), and I would consider anything non-public to be worthless. Figure you have a 1 in 15 chance of ever selling. So... Since it is worthless, get as much as possible. Is the company cash flow positive? where do you fit in? do you generate value? will you? if you are being hired for something thought-orientated, then the answer is yes. If you are a run of the mill accountant, (harsh, sorry) then get as much cash as soon as possible. Try to figure out what you are worth to them. D&B is a great call.
One more thing on stock: if you want stock then you must have a strategic influence. otherwise you are along for the ride.
At the least. This is not 1997 anymore.Quote:
Originally Posted by Hugh Jass
but don't listen to me I'm gettin drunk tonight cause I'm a PO'd fucking lemon right now :mad: :cussing:
I'm with you 100%!Quote:
Originally Posted by PTracy P1
Hey now, don't be so hasty!Quote:
Originally Posted by Ptracy P1
Sometimes those fake titty chicks are porn star freaky.
they might just let you watch while she and her friend do the screwdacorn
the screwdacorn is when she sticks a dildo on her forehead and fuck's her friend headfirst like a unicorn on amphetamines
Of all the muthafuckas, you the muthafuckest
Dude. If all the shares go off and I'm sitting pretty, we'll buy back the Miser. Everything is going to be OK. ;)Quote:
Originally Posted by lemon boy
This may qualify as thread drift. ;)Quote:
Originally Posted by Core Shot
Thanks for the many insightful responses so far.......even Splat's.
If it's a startup, it's very difficult to get a sense of what the true value of the stock is. Valuation is a very difficult topic for a startup, and often the numbers are, ahem... optimistic.
You didn't mention whether this company had floated or not. If it's a privately-held company and isn't likely to have an IPO, then the only realistic way you'll see any money from the stock grant is if the company is acquired. This is a fine exit-strategy, but keep in mind that companies only acquire other companies for three reasons: 1) They can't build what you have (e.g. a strong brand, a certain location, etc) 2) They can't build what you have quickly enough (e.g. want to acquire large chunks of customers in a rapidly growing market segment) and 3) They can buy it from you cheaper than it would cost them to build it (translation: bankruptacy sale). So you can evaluate the probability of this by looking at the company, its competitors, the market and trends, etc. Presumably you have some experience that will help you figure this stuff out if you are being considered as CEO.
You didn't mention whether it was an outright stock grant or options. Both have their pros and cons - in particular, be sure you understand the tax implications of both. Also make sure you know what class of stock it is. It's probably restricted stock, so find out what the restrictions are.
Bottom line is, stock is generally used to reward risk. It's the reward for switching from a nice stable gig to something a little less certain. But in order for it to pay off, there has to be an exit strategy -- so you need to talk to the major shareholders about what their intentions are for the company, in order to figure out what everyone's goals are there.
Bonus structure (and/or profit sharing) is used to align the goals of the company with that of the employee recieving it. So when you're negotiating it, focus on the value you deliver in return for that bonus, rather than the "gimmie lots of money!" angle. You'll get a lot further with it that way. As for how much sense it makes -- well, that's where the due dilligence comes in.
Be aware that as CEO, if the company gets acquired, has an IPO, or merely brings in a large investor, there's every chance you'll be let go. Make sure your employment contract makes it expensive for them to do that to you.
Salary. If you're not confident of the company's future, your fit with the company, etc, obviously you'll want to go for as much salary as you can get rather than other forms of compensation.
And of course, a lot of this depends on just how much money the company can actually afford to spend and still be a viable business. I've seen startups ram themselves into the ground nose first at Mach 3 because they blew all their capital on excessive executive salaries and perks.
For Exec level you had better get
1) Appropriate Salary - you're likely taking on more liability - so better be worth the risk there
2) Significant Options - some of the compensation pages or a headhunter for your industry should be able to give you ballpark %s being given to similar level positions. Dont take 1/2 of 1 % of the company if others in similar are paid 1%. Look hard at the vesting schedules and key things like triggers in the even of buyout - it makes a huge difference if your shares immediately vest upon sale or not. Spend $500 to have a lawyer versed in this look the option agreement over.
3) Parachute - what if you make a move cross country and then they lay you off 3 months later - you'll be SOL unless you get a pre arranged minimum employment term or pre arranged severence in the event of.
Intangibles - Is this a postive move in terms of other factors besides $s and options. How about
- Would this be a step up in terms of desired location or down?
- Is this a product/industry you're really interested in?
- Whats the package include for vacation, PTO, etc? If you're on this board the smart money is on you being a dedicated skier - you better get your fix or you're gonna be unhappy.
Additional background: business is in engineering/science. Offered position is CTO. I'm a tech guy, not a business guy, hence the confusion..... ;)
Privately held. Good summary of options. Trajectory is for merger/buyout in 1-3 years. The acquirer has already been identified, and is targeting it's own IPO. Not sure of their timeframe though.Quote:
Originally Posted by DerJaeger
Stock grant. 6 months of employment to vest.Quote:
Originally Posted by DerJaeger
Excellent additional comments -- thanks. Anything else?
6 mos to vest the stocks on a proposed merger heading to an IPO in a few years and a salary you can live with?
If everyone involved has a good history of success, throw in a parachute, and it sounds like it's worth doing as long as expectations hold up.
Amen brother. Having been involved in a few startups, I've come to regard non-public stock as a bit of a lotto ticket. You might get lucky, but realistically the odds are that you won't.Quote:
Originally Posted by roll - gybe
Of course, the risk factor is what actually draws me to those sorts of things, so I'm probably a terrible source of advice. :D