Do all FAANG companies have a compensation cliff in year 4. Or is it just a Google thing?
My Google offer had no cliff. It would suck with a cliff since a large portion of it was in stock grant.
Of course it has a cliff. Your RSU are based on 4 year vesting schedule. What happens in year 5? Unless you get significant stock refreshers or base bump, you’ll make less than you previously did.
Was told by recruiter there was no cliff. Base was low. How would a cliff affect total tc after 4 years. Grants vestover 4 years regardless. Only difference is you get 25% at once after year 1
Cliff is only significant if the stock price has grown significantly from the initial offer and refreshers were not loaded enough. Some companies add discretionary equity as a retention bonus. You do land higher than started though, unless you work for Amazon, of course.
Amazons cliff is more insidious, your target comp for HV rating (or meets all or whatever Google calls it) is the bottom of band for your role/level. So if you come in the upper part of he band you’re looking at that cliff at least without promo
That’s why a lot of good people leave after year 4 - that TCT concept that tracks and accounts for your initial grant makes Amazon less competitive. Everyone else jumps after year 2, because 6 months in a row on base salary is not fun either.
Not all FAANG, because the N company is more about base salary and less about equity, and the equity grants are where the cliffs happen.
I think a better framing for the concept with be a "compensation hump" from Year 2 to Year 4. If companies don't provide refreshers, then comp would drop after the first grant is vested, and in general would reduce the incentive for someone to stay after year 4. They could theoretically give a grant every four years, but I guess that's a long term approach that hasn't worked in a tight Labor Market. So, they give a grant every year, and make it so that the equity in year 5 would be roughly what it was in year 1. The staggered equity also makes it more likely that people will stick around through the first 4 years. The bad consequence of this approach is that there's a massive pay hump at year 4, especially if the stock has been going up (so the new hire grant would be worth a lot more). Year 5 onwards you'd have steady pay again. So yea, every company that uses a vesting schedule and has refreshers that are a lot smaller than the new hire grant will face the same issue.
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All companies have this unless you’re a high performer. Reason is, refreshers are added onto your initial RSU grant. You usually don’t get another large grant unless promo or consecutive EE->S
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