Many posts claim that while tech offers may seem lower than top quant firm offers, it would beat the quant firm offers with stock appreciation. As an ex-F/G employee (and aS a MiLlIoNaIrE) with first-hand knowledge of compensation structure in both tech and finance, I decided to do some calculation on the effect of stock appreciation on overall TC. Let's examine a top of band E5 F / L5 G offer: Base: 200k Bonus: 15% Equity (4 years): 700k Signing: 50k Assume 20% yearly stock appreciation and no RSUs are sold, total pre-tax income in 4 years would be 200*4*1.15 + 700*(1.2^4) + 50 = $2421k. For a fair comparison, let's look at a finance offer where instead of equity+15% bonus, an equivalent cash bonus is paid at the end of every year, and the entire cash bonus is invested into the same stock as the above: Base: 200k Bonus: 200*0.15 + 700/4 = 205k Signon: 50k Total income after 4 years: 200*4 + 205*(1.2^3 + 1.2^2 + 1.2 + 1) + 50 = $1950k. Yearly income difference between tech and finance: (2421-1950)/1950/4 = 6%. In other words, if an all-cash offer is >6% higher than the tech offer, then you would make more over 4 years with the all-cash offer by investing the cash bonuses into the tech company. A few things this calculation has not accounted for: 1. An yearly stock appreciation of >20%/year: while certain tech stocks have indeed outperformed NASQAD-100, it'll not be logical to make your decision base on an assumption that the tech company you choose will continue to outperform. In fact, FB/Google stock prices were stagnated between late 2017-2019. 2. Stock refreshers: you'd get yearly bonus increments at top quant firms to offset this. Stock appreciation of the refreshers would only change the final 6% figure slightly. 3. Taxes: the tech offer might be more tax-friendly due to a larger capital gain tax (instead of income tax), but the difference it makes to the overall post-tax income would only be a small percent. 4. 4-year stock cliff: this is a small advantage finance offers has over tech offers. 5. Stock choice: with cash bonuses you can invest in whatever stocks you believe have the biggest potential/least risk while with RSUs you don't get a choice. 6. If you quit before 4 years, the 6% difference would be even lower. This post only focuses on TC and there are obviously other factors you need to consider (location, culture, team wlb, interest etc). TC: higher than tech #google #facebook #netflix #apple #amazon #citadel #janestreet #hrt #swe #offer #tc
I like the unnecessarily included parts of “aS a MiLlIoNaIrE” and after all that write up “tC: HiGhEr ThAn TeCh”. Weird flex but okay, got your validation for the day from random strangers on the internet?
Looks like this could be a good way to compare the two TC-wise. How does the math look if instead of holding tech stocks, you sell every vest and hold total market in both cases? How does wlb compare between the two? In your experience does finance work match up with EE/GE rating work in tech? Maybe we could consider that in the calculation by fixing that variable somehow. Also curioua, do the bonus increments really match up with refreshers? Another way to look at tech initial grants are as a guarantee bonus for 4 years. Haven’t seen 4-year guarantees for bonuses on finance offers I’ve gotten, just 1-year guarantees. Have you seen otherwise?
The examples are formulated such that the effect of the 4-year leveraged RSU grant can be examined. Selling at vest wouldn't affect the comparison as the equivalent thing can be done for cash bonuses. WLB varies greatly between teams even within the same firm; finance don't necessarily have worse WLB as many teams in FB, AMZN, TSLA etc could have it worse. Best to ask your hiring manager during the interviews. Bonus increments are highly dependent on individual performance and the high variation/lack of data makes it hard to compare with tech. In general both the lower and upper bounds are more extreme than tech refreshers. Not sure about other quant firms, but in Citadel bonuses generally only go up every year (or you get fired for underperforming).
Good points. I’ll definitely keep this in mind the next time i have to compare. Curious how much more %-TC you’re getting at citadel compared to tech. Levels.fyi has a lot more data for FANG but sparse on citadel.
20% stock appreciation is a mite aggressive and unrealistic. Maybe the past 2-3 years,yes, but it's not sustainable
I used 10-year QQQ performance as the benchmark. It drives my point that even with an optimistic appreciation, the difference is merely 6%. If you assume a lower appreciation (eg. S&P), then the 6% figure would be even lower.
This is stupid, you are assuming RSUs are not sold at FANG, and in finance you don't invest your cash? What kind of comparison is that?
What are you talking? RSUs being sold and reinvested would not affect the 6% figure. I'm assuming you actually invest all your cash bonuses for finance example. See my other comment about base salary. The comparison is meant to isolate and examine the effect of leveraged initial RSU grant.
How’s your experience so far working citadel? Curious to know things like wlb and engineering culture. Also are you a individual contributor or in management at citadel?
Get a life. Your (TC) obsession seems unhealthy!
There are a couple from Citadel on Blind who sound like OP.
^insane these folks are! Day in day out measuring contest This post is classic - https://en.m.wikipedia.org/wiki/T.M.I._(South_Park)
OP, have you heard of a tech company paying all cash, called Netflix?
Yeah, this post is for comparing between all cash and equity offers. Netflix offers stock options too so the scope of that comparison is not within this post.
I just wanted to point out that, in tech, you have a choice between F/G vs. N with transferrable skills - given that you're smart enough to crack the top quant firms. Also isn't SWE/Quant a 2nd class citizen in Finance? SWE will have better career growth in tech. How's the career growth in the top quant firms?
OP, what has your bonus progression been at Citadel? (Just looking for 1 data point) What was your first year guaranteed bonus and what was your bonus in subsequent years?
I would say liquidity is another hard-to-quantify but essential factor, e.g. in FB 2/3 time in a year you can’t trade the stock. But yeah, this would be sort of irrelevant with your presumption to hold the stock throughout the 4 years.
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Without considering risk, investing all you money is the best. RSU is just like leverage.
Both examples have a base salary of 200k, what you choose to do with it does not affect the result of this analysis.
RSU invests more stocks. It has higher risk.