Why include signing bonus in total compensation?
Since we are paid in various ways other than salary, it is important to take note of the current forward 12 month rate of recurring income to compare current earning power vs the market. When I mentally account for my total compensation, I do not include income that is temporary in nature and not reasonably likely to recur in the future. E.g income from a winning lottery ticket would not be included. Using that reasoning, I would not include income received from a signing bonus due to the temporary nature of signing bonuses. RSU income i do include because of annual refreshers. Amazon is well known for offering large signing bonuses. Why do so many people count these temporary payments in their total compensation?
Average tenure in Amazon is less than 2 years. So they do get the sign on every year
RSU vest is also “temporary”, particularly at some companies that offer shitty or no refreshers. I amortized my signon over 4 years like my grant. That’s roughly the default of how long I intent to work somewhere when I take an offer (subject to change depending on how it goes). If you amortize your signon over one year and claim your first year TC you better be planning on moving every year otherwise you’re being dishonest.
Good point about RSU potentially being very temporary especially with wild swings in the stock price. I include only my current refresher rate in my tc even though I might be earning more than that from market fluctuations on old grants. If interviewed somewhere else perhaps I’d embellish this but I try to be more realistic.
Yea I try to weight the two numbers. How much the company is paying me directly at present/grant time since this how much they value me and how much I expect it to be worth and the risk of the stock (alpha and beta ratio of the stock).
Because they want to feel big and important. Amazon also intentionally muddies the waters by giving even more cash up front and stock years later so it's hard to compare a real recurring compensation number. For a real income comparison, you have to discount one-time sources. This includes sign-on grants if the refreshers aren't big enough to sustain that income level.
Yea the Amazon case is special. Seems to me like they want to give a backloaded vesting cliff to most people but they know senior engineers with better offers won’t accept that. So they give a cash bonus to smooth vesting to these few individual. Pretty unfair IMO.
Why unfair? It’s different but not unfair. And some people think it’s even more fair as company have actual $$ numbers they want to guarantee you get every year.
Amazon comp structured differently, they have a target $$ amount they want you to get and pay it with combination of base pay, sign on, RSUs including stock market appreciation on unvested stock. The good thing, you are guaranteed to get no less than that year after year. For example if stock price will drop, Amazon will add more RSUs to compensate for it. So for your first year at Amazon, you get all of your comp in cash. It would be incorrect not include your sign on as it vital part of your comp package.
Then what’s the point of paying stock RSUs if they give you cash to make up for it and claw back refreshers if your stocks growth above your target number. Why not just pay in cash then? You get an upside if the stock grows faster then they can claw back refreshers I guess. But it’s not really motivating if you can’t capture most of the growth due to clawback on refreshers.
I would prefer folks state total without, then state sign on separate.
There is probably a way to sensibly account for it like spreading it over however long you expect to stay at the co. Given that many people only stay a few years it can still be significant. Discounting it entirely is surely also irrational.
Maybe this is why I'm not in SV, but I view a job like a mortgage. I expect to be there 5-indefinite years, barring a predictable life event. Not saying I _wouldn't_ leave before 5, but I wouldn't _plan_ to leave before 5.
Signing bonuses are more “tangible” than performance bonuses or rsu refreshers, so including them is prudent imo. Including a performance bonus is more sketchy imo, since that’s not at all guaranteed.
In this industry, performance "bonuses" are expected, mostly reliable income - the recruiter should be able to tell you what the bonus target is for your role. Yes, you might get more, and you're not _guaranteed_ to not get less (but below target is generally a sign of not meeting expectations). You can generally count on getting the target if you do your job satisfactorily. Bonus is perhaps the wrong word for that, but it's the accepted lingo.
Yea not sure about Expedia but everywhere I worked hitting the target bonus wasn’t anything out of the ordinary as long as you weren’t a bottom performer. You could also get fired and lose your base salary so that’s not guaranteed either. If you’re going to be making 250k+ TC then if cause you need to perform to a minimum level to earn it.
Why say total if you're not including total
It makes sense to include it when the sign on bonus is for offsetting the RSU vesting schedule, similar to what happens at Amazon.
^this
How frequently does amazon do refreshers?