See poll. Yearly calculations. $400k total vs $450k total yearly. Different breakdowns. Please comment why!!
Depends on the company. I'd rather take the bigger salary and invest in index funds unless I were working for a company that will really outperform the rest of the market
But... You can sell those stocks right away
Shy girl you obviously donโt understand how stock rewards work. The total number of shares are struck at todayโs price. You canโt sell unvested shares. If thereโs a stock market crash then your unvested income goes down meaning your future tc is lower.
People aren't very smart. They think they can predict the future when they say the stock price can sway. That's as ignorant a statement as saying that the stock price will keep on increasing, or that a crash is imminent. Of course the probabilities are on the side of the naysayers. But one company is not enough of a sample space to apply probabilistic models. On the other hand, if you had $1mil today, would you invest it all in the stock of that one company and be willing to only sell it at a schedule that matches your stock vesting schedule? Have you done enough research and do you have enough confidence in your decision to bet $1mil today on a vesting contract specified in that offer?
1M analogy is not correct. If you work there for 1yr and stock crashes, take the cliff and leave. If you got 1M/4y, you won't lose 500k in a 50% crash, you'd lose 125k and move to a better company with better prospects. You only have to get it right once. If after three crashes like that you get to a company that goes up 2x in 4yrs, you'd still be better off than taking cash on all 7 years.
Good point. So the more accurate analogy is that you are buying multiple call options at zero dollar price with zero money down. The options mature according to your vesting schedule. Since your cost for this contract is zero, it doesn't cost you anything to walk away any time. You gotta compare it with the investments you could make using the cash you get from the other offer. Either that or consider 200k the cost of your options. Makes it quite complex when you plug in the option of walking away earlier.
Higher stock comp for sure. If the stock value goes down, ask for refresher to compensate. If they refuse, switch jobs. Statistically stock goes up long term.
You have to price in risk. Leaving before the cliff, infrequent vesting, price change between grant and vest. If you vest a dollar amount (not a share amount), every pay period, without a cliff, then sure - it's as good as cash. Otherwise it's not. How much that risk costs is debatable, but it's not zero.
A couple things not mentioned so far to keep in mind - benefits such as 401k match and espp are often based on percentage of base, which favors cash. Also, the stock portion should be viewed slightly lower to account for inflation - ie your last year grant (assuming this is 1M/4yr) with current 2.5% inflation is worth 232k at present day value - average comp over the 4 years is worth ~442k (present day) rather than 450k.
The inflation part is wrong - your 250k in stock should appreciate, on average, with the market, which follows inflation. Your grant is by number of stock, not by dollar value. It's actually the opposite - base loses to inflation
Appreciation is separate from inflation. You need to calculate the present value discount rate and then apply the appreciation based on that, that'll give you the real present day value. To illustrate this, consider the simplest case of 0% return. You would be vesting 250k per year, but that 250k would be losing 2.5% from inflation. If you got a 1% return per year, you would vest 252.5k first year, 255k second year, 257.6k third year, 260.1k last year. Now adjust that for inflation and you have 246.3k, 240k, 234.4k, 228k for a total of 948.7k in present value for a real return of -1.5%. Now that I wrote this out I realize I applied the time discount at the beginning of the year instead of the end at the for the original post, oops. Present day value of the last year should be 226k and the average value is 235k for a comparison comp of 435k.
Money has time value. That's why cash is always king.
Irrelevant, you won't get all the cash now, you'd get it spread over 4 years.
Is this a publicly traded company?
More companies should do all base salary.
Netflix knows what's up!
I'd take the base all day unless I was SUPER confident in the company. But even then, in a general downturn the stock will probably fall even if the company performs well. A $50k+ drop is extremely likely in that scenario And during the last 2 recessions in particular it would have been several times worse than that.
Tech Industry
2d
52003
Goog Employees Arrested
2024 Presidential Election
Yesterday
1543
Biden ruined America and tech! Tax plans are insane
Tech Industry
Yesterday
399
Chances of meta clearing E5 with screwing up one coding one round and acing all other
India
Yesterday
1704
Lost respect for Modiji
Tech Industry
Yesterday
6773
Google doing more layoffs, restructuring including country moves
I don't get it. Why would you forgo $50k???
What if you only decide to stay 4 years?
Because that 250k swing between 100k and 500k