Salary Discussion - equity plus bonus
Looking for advice/insight on salary. Currently a development manager with 5 years of experience on $140m plus of class A multifamily development. Have been offered an associate role for $100,000 (less than what I make now), with offers of $10k in equity per deal, 1.5% commission capped at $50k for any off market deals or PE I bring in, and up to $25k in bonus. I'd prefer to have no cap and base it on a tiered structure and have option of either equity or cash.
This company is similar to a start up. Has 3 deals in their pipeline, but not closed. Steady growth over the last decade with 3 partners. More importantly, they just seem like fun/smart people to work with. Unlike my current role which is a mid size family run operation with quite a few executive challenges.
I've been interviewing for a long time trying to find the right next step for my career and have turned down offers with various structures like this. I was expecting a salary base of at least $125k if not more plus interest.
My question is, how can I predict what that $10k could even out to? Can someone explain it to me like I'm 5? I do cash flow models, I get it. I get where the money is going and coming from, but I don't have all of the information to truly model it and understand that in year X I will get $ and that feels risky to me. $10k in 2 to 3 years when the deal comes to fruition doesn't sound like a lot, even at an equity multiplier of 2.5.
Additionally, moving from a family run firm that doesn't have any specific structure on bonus to something like this, so this is my first time negotiating this type of salary. Any input on best practice/favored salary stack is appreciated. I don't want anything tied to the performance/schedule of a deal. But, assuming that salary grows each year, at least 1/2 of bonus, plus acquisitions average 2-3 per year, I anticipate an extra $30k at some point. But, the payout would not be any time soon.
Hopefully this is clear. Thanks in advance.
Edit to say: I don't think this is necessarily career advice. More finance related, but if it's not the right group/against the rules, I'll post elsewhere! Thank you.
with respect to that $10k per deal... is it essentially LTIP granted in each deal in the firm/manager's carry pool? If so, just ask what they expect for an equity multiple for that pool or just projects in general. If they say 3x-4x, then essentially your 10K should be worth $30k-40k at payout. Other questions may include if that pool gets developer fees or just promote/carry from the structure of the deal (I'd venture a guess that's a no, but worth checking). Clearly, the value of those LTIP style payouts tend to vary greatly with deal performance and use of leverage/structure... the more 'aggressive' the deals... the more they could be worth.. and bigger chance that number is $0.
good luck!
I'd push for a % of equity rather than a flat $10k on sourced deals provided you believe you can source deals of a large enough size for that to make sense.
What do you recommend as percentage/what is standard? This will probably be 10% of my actual role, but because of previous connections and jobs I've had I expect I'll source one or two over the next few years.
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