Higher base or Higher Equity?

Target / Eng SeaTC
Nov 19, 2018 28 Comments

With the recent slump of tech stock (FAANG, Oracle, MSFT) what would your preference be for salary TC?

Higher base and lower RSU?
Lower base and higher RSU?

Would you rather make
200k base with 20% bonus
or
160k base with 400 shares of Amazon not knowing if share price will tank?

Would it depend on whether or not it’s FAANG RSU grants?

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TOP 28 Comments
  • LinkedIn hdvkuscbkg
    What kind of dumb question is this? Amazon shares would have to go down an insane amount to not choose the shares.
    Nov 19, 2018 1
    • Target / Eng SeaTC
      OP
      Apparently not so dumb that people are having civilized conversations without being an ass.
      Nov 19, 2018
  • Intel Dhjct
    Base - I’ve never understood people who want RSUs given you can buy shares with money if you want and the taxation is the same.
    Nov 19, 2018 1
    • OSIsoft
      Yqgdw

      OSIsoft

      PRE
      OSIsoft
      Yqgdwmore
      But by giving up on 40k base you are getting 400 Amazon stock units. Now it's a great deal right?

      Basically it depends on what is the multiplier and what is the value of stock.
      If you are choosing between $X base vs $X worth stocks, then the answer is very obvious.
      Not so much if you are getting$10X stocks of good company.
      Nov 20, 2018
  • Netflix bread
    I’m all about that base (bout that base). 🤑
    Nov 19, 2018 0
  • Amazon Soxnsna
    Here is the problem with the question in the first place. Getting a 400 share initial grant would make someone a very high level engineer at Amazon just based on stock price alone so it’s not a very realistic scenario. In addition, that 200 k base and 20% bonus would be on top of an equally lucrative dollar amount in another FAANG stock. There in lies Amazon’s issue with competing in the market, they bet that the stock will carry them over the other competitors in TC and it has for the most part. But if we see and ‘market correction’ people will be gone real fast. Uncle Jeff is a long term betting man and it’s quite literally his comp philosophy. Not going to change.
    Nov 20, 2018 7
    • Target / Eng SeaTC
      OP
      Thanks for clarification. So what do L6 grants look like?
      Nov 21, 2018
    • Amazon Ocdgjb
      Totally depends on the trailing 30 day stock price, how much their sign on is and base but the base is usually maxed at 160 for 3’s
      Nov 21, 2018
    • Target / Eng SeaTC
      OP
      Sure I understand the max base but I would imagine L6 grants probably have to be around 250-350 @ 1500?
      Nov 21, 2018
    • Amazon Ocdgjb
      Amazon doesn’t look at it by the number of shares, the consider the dollar amount at time of the Grant over the 4 years. 250 shares would be about right at this price
      Nov 21, 2018
    • Target / Eng SeaTC
      OP
      Thanks for the input - mucho appreciated
      Nov 21, 2018
  • Amazon azmix
    It’s a tricky question as it places you at 240K with the first option and 400K with the second.
    Nov 19, 2018 5
    • Target / Eng SeaTC
      OP
      I deliberately worded it as shares since technically RSU Grants are provided in shares and not dollar amounts, right?
      Nov 19, 2018
    • Amazon azmix
      None of the above. You need to know that the regular vesting schedule at Amazon is 5-15-40-40 where for the first two years you’re compensated with additional cash (sign in bonus). So 40% of 400 stocks at today’s stock price plus 160 base puts you at roughly 400K TC.
      Nov 19, 2018
    • Target / Eng SeaTC
      OP
      Out if curiosity how many Amazonians make it through full vesting cycle? Also how is sign on bonus determined at Amazon?

      @C+Plus how does FB approach RSUs? Is it value and Target Comp or is it shares?
      Nov 19, 2018
    • Target / Eng SeaTC
      OP
      Ah. So in the case of a dollar figure of RSUs a lower base with a guaranteed dollar amount worth of RSUs is definitely better than “grant shares”
      Nov 20, 2018
    • Amazon Soxnsna
      Average tenure is around 20 months. Many get all the cash from year 1-2 and split or are let go
      Nov 20, 2018
  • Amazon / Eng mrAmaze
    In my opinion this is an obvious choice. To assess, let’s first deduct the common amount between both, which is $160k. For simplicity of calculation, I’ll ignore any minimal 2-3% raises you may get as they’re fairly negligible. After that, the two offers reduce to the following:

    1.) $40k + 20% bonus = $80k/yr
    2.) 400 RSU / 4 yrs = 100 RSU/yr

    So you’re debating between an annualized 100 RSU vs $80k cash each year. Therefore, as long as Amazon stock remains above $800/share then you are much better off with option two. The potential upside with this option is also tremendous, since history shows us that 4 years will almost definitely bring stocks back to their former highs (and likely even higher). Therefore you can reasonably assume an average vesting RSU price of $1,600+/ea. With option 1, you’re locked into a set income and have almost no potential to make more (excluding a few small 2-3% raises).

    Therefore, it would be completely foolish to choose option 1. DEFINITELY choose option 2!
    Nov 20, 2018 3
    • Target / Eng SeaTC
      OP
      But on the other end of that how likely do you really believe someone would be able to stick around at Amazon before burning out? What’s the burnout rate there?
      Nov 20, 2018
    • Amazon / Eng mrAmaze
      I 100% plan to stick around for a minimum of 4 years to get my stocks. Also, with golden handcuffs like this guy is being offered, I could suffer through 4 years of hell in order to come out on the other side with almost $1M in Amazon stock!

      Additionally, all of the complaining you hear on Chime is only in some teams. Obviously the least happy people will be the most vocal, so take it all with a grain of salt. My team is young, friendly, has reasonable deadlines with challenging work, and I honestly love it. There’s a very high probability I’ll actually stay for more than 4 years.
      Nov 20, 2018
    • Target / Eng SeaTC
      OP
      My post was made as a hypothetical - I’m not entirely sure what level at Amazon grants 400 shares. L6?

      Anyway, I’ve heard some bad things about WLB for folks with families though.
      Nov 20, 2018
  • Cruise Automation mocca
    RSUs. Value you set and how Amazon bonus covers first two years makes it a no brainer. Even if they spread equally over 4 years, stock has to go down another 46% to break even with higher base option.
    Nov 20, 2018 2
    • Target / Eng SeaTC
      OP
      I think it depends - I have no idea how Amazon decides on sign on bonus nor do I know how their true comp structure is. Hence the hypothetical question. And yah assuming Amazon stays at 1500 then over 4 years the potential of Amazon would be 1.2 - 1.4 mil @ $1500/share versus potentially 960K with base and bonus.
      Nov 20, 2018
    • Cruise Automation mocca
      5/15/40/40 mentioned above is consistent from what I hear. The sign on bonus makes up for first two years to get to a point where it would be if you got 25% each year for first two.

      So if it was worth 100k per year. First year is 5k stock and 95k cash sign on.
      Second year is 15k stock and 85k cash sign on.

      So in your example.
      Year 1: 160k base + 5k stock + 95k cash sign on is 255k in cash alone.
      Year 2: is 245k cash alone.

      Average tenure in tech is only around d 2-3 years. And your scenarios has the higher stock choice paying more cash than the high base choice first two years.
      Nov 20, 2018
  • Microsoft / Product CloudFreek
    Higher base is always good to me because it's predictable.
    Nov 20, 2018 0
  • Microsoft zMJv04
    Base..we may have few years of major market correction
    Nov 19, 2018 0