I currently work for a large public REIT where our compensation package is made up of a Salary and a yearly bonus comprised of Cash and Stock. The stock awards are unvested the year they are granted and will vest equally over the following 5-years. I have always had a hard time figuring out how I should think about my total comp, for example if I made 100K Salary and 50K Cash and 50K Stock would my pay be $150K or 200K. I have had several debates with the higher ups on my thoughts versus how they would like us to think about it. Also several years have gone by and I now have 90K of this unvested stock that will fully vest over the next 5 years. My question to you is how would you value this stock portion of your compensation package? I have been in discussions with a few PE firms recently and having a hard time thinking about how i should think about my pay versus a normal Salary+Cash Bonus pay structure. How much I should need to leave and be neutral, the long term nature of the stock awards make this difficult. Any thoughts would be appreciated. Thanks
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If you cant use it it has no value, unvest stock is hardly compensation, its more like promis of future compensation. Even worse is that it can go down in value by the time its actually vested.
Anyways I dont think of vested stock bonuses as compensation, just "loyalty points" but my point of view may be different than yours you mentioned you've been at the same company for several years where I've spent two years at my previous job, two years at current and thinking about moving to a new firm so the idea of spending 5+ years at the same firm doesn't even enter into my thoughts ATM.
I tend to agree with SHB, but an argument could possibly be made to include the value of the shares that vest in any given year into that year's comp. For example:
2014 Salary: $100,000 2014 Cash Bonus: $50,000 160 Vesting Shares from 2012 Bonus @ $50/ea.: $8,000 200 Vesting Shares from 2013 Bonus @ $50/ea.: $10,000 TOTAL 2014 COMPENSATION: $168,000
I would definitely like to hear other opinions on this as well.
Generally think along the same lines - I'm at a point in my career where it would be presumptuous to assume I'll stay with any one employer over a 3-5 year vesting period, so at most, I consider anything that will vest within the next year to be reasonably likely compensation. The rest is kind of pie-in-the-sky.
When considering whether or not I'm happy with my compensation and comparing to other possibilities, I exclude most or all of the stock award piece in my thinking.
I agree with you guys. There is a notion that we should consider the Stock awards as our value to the company and look at it more as savings and LT wealth creation and would be foolish to not get paid out for those unvested awards by a future employer. I just have a hard time wrapping my head around that view of the LT incentive type comp whether it is RSAs, Options, or any other type.
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