Hey Monkeys - Have 2 offers, both great offers, great jobs and would like to assume for this purpose all is equal except pay packages. Would love to pick your financially astute brains for wisdom on how I should properly look at these two packages. (Not actual dollar amounts)
Job 1: Private Co.
Salary: $100K
Cash Bonus: $50K
Job 2: Public Co.
Salary: 85K
Cash Bonus: 40K
Stock Bonus: 60K
*Stock Bonus paid annually and Vest equally over 5 years.
In my situation these offers are identical, besides pay, and would like to hear your thoughts on how you would value/think about these two pay packages and which one you would prefer. Any help/insight/thoughts would be appreciated. Thanks Friends.
I'd take cash and the freedom that comes with it over the vested stock bonus in my opinion. I am not sure what your situation is, but no guarantee that you will even last long enough to fully reap the benefits of the price appreciation in the stock; assuming that there is any appreciation.
How long do you see yourself being there and do you see the stock appreciating from its current (likely inflated) value? If the stock is with 60k today but the value gets cut in half over the next few years then youre probably better off taking the cash and investing it elsewhere. Additionally, that incremental 25k in cash makes a bigger difference in your life now than the additional 50k will make 5 years from now if you're making 400k per year (hopefully).
I would take the cash my man, if you get a sick job offer in 2 years you don't want to have 100k+ tied up in stock holding you back.
I am trying to get away from making an assumption on future stock performance because I could also take the cash and invest it so mentally I am just assuming that stock stays flat. I do agree strongly on the flexibility advice, passing on a possible great opportunity because you have 100K+ tied up in unvested stock at your company is a real issue and the longer you stay the more stock vest each year but the harder it is to leave as well. Thanks for the thoughts.
Cash is king. Also, IMO; private co > public co
You should be looking at the stock portion of your bonus not as 60K, but instead as the trailing amount that vests each year or {0, 12k, 24k, 36k, 48k, 60k} over the first 6 years. So if we make a gigantic assumption that your other cash comp at both firms and the company's stock price both would not change, then over 6 years your comp trajectory would look like this:
Public: {125, 137, 149, 161, 173, 185} Private: {150, 150, 150, 150, 150, 150}
As you can see you don't "catch up" at the public company until your 6th year - the private company pay package is higher. But in truth there's no such thing as "all else equal" and the more important thing to consider is your longer term career (and salary growth!) trajectory at both places.
Thanks for your response, this is actually how I am thinking about it. The question is let's say you are in Yr.3 of the Public and you decide that you need a 15% pay increase to leave for another firm - Would you calc it as $171K (149 x 1.15) and ignore the $144K of unvested that you would have?
Yes, I would ignore the unvested portion except as a way to predict my compensation growth. Unvested equity is no different from unpaid future salary (except in a few limited circumstances like a change of control).
You're getting guaranteed bonuses?
Distinctio ratione nam rerum quam. Facilis inventore dolores minima molestiae. Ab pariatur voluptas et assumenda et sint. Nisi qui eos sed dolores aut laborum. Repudiandae vel voluptas asperiores sed.
Et ducimus tempora temporibus consequatur voluptatibus adipisci. Corrupti enim qui quo dignissimos labore et qui quisquam. Facilis et pariatur explicabo laudantium.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...