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Golden Handcuffs

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Re: Golden Handcuffs

#131

Post by nonameiguess »

heavyset_go wrote: post #89
choppaface wrote: post #4

The C-level to IC comp ratio is still way too astronomical. If a VC is telling you he feels there’s a better way to comp, he has a financial interest in ensuring your loss. Do not support investor-focused comp models like backweighted vesting (Amazon) or outright fraud like a start-up giving you a stock offer with no percentage or no 409A. Employees deserve high-quality equity on par with investors. The OP’s suggesti…

> Employees deserve high-quality equity on par with investors. There is no reason that labor and time couldn't build equity, it's just that our current system favors those who use capital to build wealth over those who need to sell their time and labor to build wealth. A common reason I hear for the fact that investors get more equity is because of the "risk" they take on, as if losing some money is the only risk on…

The more amusing (or disturbing thing) is that we have created an environment where, practically speaking, investors have less risk than everyone else. We were just hit with one of the largest global disasters of the past century last year and the immediate reaction was flood equity markets with $3 trillion to prop up financial markets. Owners of capital cannot lose.

Even before these last few years of craziness, what I will never be able to get out of my mind is the story of Frank McCourt. I'm a lifelong Los Angeles Dodgers fan. He bought the team from Fox in 2004 and proceeded to treat a storied franchise in the nation's second largest city like it was his personal credit card. He didn't even use his own money to make the purchase. It was entirely with loans. He then proceeded to spend 8 years gradually bankrupting the organization until the league kicked him out and forced him to sell.

What was his loss? Nothing. The team sold for 8 times what he originally paid, not because of anything he had done, but just because television contracts for the entire league had become so much more lucrative over that time. The man put up $0 of his own money and made $2 billion by being one of the worst team owners of all time and making the organization he owned literally bankrupt.

I will never again in my life accept these econ theory gibberish about all the "risk" faced by business owners. If you own a salon or a restaurant or something, fine, I accept you might actually be out on the street. But if you're the right class of person that the banking system has accepted into the club, you can get infinite loans to buy whatever you want with no collateral, drive a business into the ground while spending the bulk of your time with hookers and blow, and make out with billions anyway.

Re: Golden Handcuffs

#132

Post by sokoloff »

elefanten wrote: post #56
cddotdotslash wrote: post #36

Can we just link directly to the Coinbase post [1] instead of this 8-sentence blog spam? [1] https://blog.coinbase.com/how-coinbase-is-rethinking-its-app...

Thanks. This was much more informative. For those wondering, they’re doing: -increasing comp targets to be at or above industry 75th percentile across the company -no negotiation for comp (standardized starting offer by location/role) -yearly stock grants with no 1 year cliff upon hire

"75th percentile of industry" is almost meaningless.

Does industry include programmers at Comcast, Liberty Mutual Insurance, Staples, Smalltown Bank, Wipro, and everyone else who employs programmers in any capacity?

Or does it mean Amazon, Facebook, Netflix, and Google?

If you're beating three out of those four, your comp is excellent. If you're beating 3 out of 4 all companies who hire programmers, you're hopelessly uncompetitive with the "actual" top tech market.

Re: Golden Handcuffs

#133

Post by om2 »

choppaface wrote: post #4

The C-level to IC comp ratio is still way too astronomical. If a VC is telling you he feels there’s a better way to comp, he has a financial interest in ensuring your loss. Do not support investor-focused comp models like backweighted vesting (Amazon) or outright fraud like a start-up giving you a stock offer with no percentage or no 409A. Employees deserve high-quality equity on par with investors. The OP’s suggesti…

What specifically is wrong with a comp model of one-year vesting (instead of 4-year) and no cliff? Whether it's better or worse for employees depends on how they size the grant and in general is very situational. If the company goes up in value a lot over 4 years, then yeah, the employee may lose out, even if grants are comparable in dollar terms at time of grant. If the company has more volatility than growth, or only modest growth expected, then annual grants with one year vesting are likely better. It definitely does not seem as obviously evil as backlighted vesting or underspecified stock offers. Is there a more subtle problem?

Re: Golden Handcuffs

#134

Post by ska »

darod wrote: post #75

Is he misusing the definition for "golden handcuffs"? From my understanding, the issue is that an employee has 90 days to exercise one's options. Most can't afford to do so if the company isn't public due to the cost to exercise and the tax burden. I'm not sure how this new options structure addresses that.

> Is he misusing the definition for "golden handcuffs"?

No; in general "golden handcuffs" refer to any situation where future financial compensation counterbalances any desire to leave. You give one example, but there are lots of scenarios (it could as easily be pension qualification, or earn-out rights, or whatever).

Re: Golden Handcuffs

#135

Post by cortesoft »

CerealFounder wrote: post #125
heavyset_go wrote: post #89

Earlier quoted context omitted.

> Employees deserve high-quality equity on par with investors. There is no reason that labor and time couldn't build equity, it's just that our current system favors those who use capital to build wealth over those who need to sell their time and labor to build wealth. A common reason I hear for the fact that investors get more equity is because of the "risk" they take on, as if losing some money is the only risk on…

Your moralizing a non moral argument. Its simply harder to get access to someone else's capital than someone else's time. So people can charge a premium for the capital. I do believe that premium is probably a bit higher than it should be because it used to be EVEN HARDER to get that capital so people are pointing out the slightly outdated examples of cost in order to gain negotiating leverage. In the end our time an…

I think the big difference is that worker time can’t be saved in the same way that capital can be. While capital will lose value over time to inflation, it still holds most of its value if it is not spent (and there are very safe investments that can be used to hold even more of its value across time) An investor can choose to hold their capital for a better investment at a later time.

For a worker, however, every minute of labor is use it or lose it... it isn’t like a worker can look at the available jobs and say “nah, I think I’ll just save up my time for now and wait for a better opportunity to spend my labor hours”. You can’t wait a few months and then trade all those months of labor for more money later.

Re: Golden Handcuffs

#136

Post by benlivengood »

xyzelement wrote: post #52
nineplay wrote: post #23

I've talked to two FAANG-level recruiters recently about remote openings, which are all the rage now. One was willing to give a base-salary range but absolutely refused to provide any comp information beyond that. Signing bonus? Equity? "We are still working out those numbers for remote employees, we'll negotiate when we give you an offer" The other - everyone at the same level at the same location gets the same comp…

This is an incredibly nearsighted approach for reasons other responses partially point out. First you have confused uncertainty with a bad scenario. For all you know the offer from the first company would end up much higher than from the second but you won't know. Second, and this is probably a bigger deal - lack of exact range often indicates flexibility in seniority, skillset and scope. So in your case, your only g…

> Second, and this is probably a bigger deal - lack of exact range often indicates flexibility in seniority, skillset and scope.

The flexibility should be reflected in the job title or level; salary bands are vital to ensure that people at the same level are being compensated equitably and know what they're interviewing for up front. It's totally fine to tell candidates they're going to aim for a L4 position with the possibility of L5 (or higher) depending on interviews.

Re: Golden Handcuffs

#137

Post by valdiorn »

analyst74 wrote: post #122
conjecTech wrote: post #99

This is horrific for employees. Ben Kuhn already nailed the math here[1]. The optionality embedded in long-dated grants is a huge fraction of total comp at high-growth companies and represent almost the entire right tail of outcomes. It also requires assumptions about the future, which is why companies generally abstain from quantifying what it's worth. It seems like the companies doing this are trying to arb that un…

This is no different from how Amazon does targeted compensation, where rising stock price means you get less/no refresher and raises, or all-cash comp at Netflix. It's catering to more risk-averse candidate pool.

Having worked somewhere where I had a large deferred bonus, which I had to walk away from after the company turned hostile very quickly, I'd much, MUCH prefer to get my bonus paid out at the end of each year, vs. having it deferred, even if I have to take a hit on overall comp instead.

You just can't estimate how compatible you and your employer will be 4 years in the future.

Re: Golden Handcuffs

#138

Post by jacobr1 »

sokoloff wrote: post #132
elefanten wrote: post #56

Earlier quoted context omitted.

Thanks. This was much more informative. For those wondering, they’re doing: -increasing comp targets to be at or above industry 75th percentile across the company -no negotiation for comp (standardized starting offer by location/role) -yearly stock grants with no 1 year cliff upon hire

"75th percentile of industry" is almost meaningless. Does industry include programmers at Comcast, Liberty Mutual Insurance, Staples, Smalltown Bank, Wipro, and everyone else who employs programmers in any capacity? Or does it mean Amazon, Facebook, Netflix, and Google? If you're beating three out of those four, your comp is excellent. If you're beating 3 out of 4 all companies who hire programmers, you're hopelessly…

It is a named set of a peer SV companies. So probably FAANG, but they don't give specifics.

Re: Golden Handcuffs

#139

Post by joshuamorton »

akarma wrote: post #111
joshuamorton wrote: post #95

Earlier quoted context omitted.

> Nearly every major union I've seen supports seniority-based promotions. There are a number of well known counterexamples, sports and acting unions/guilds for example. > If you have evidence that unions don't support seniority-based promotions I've yet to see any tech union advocate for this position, and they generally advocate against it. Tech Workers Coalition and the Alphabet Workers Union are the two I know of…

I'm certainly not an expert on unions, so thank you for the detailed reply! > There are a number of well known counterexamples, sports and acting unions/guilds for example. I can't imagine how promotions would apply to areas like sports and acting the same as it applies to typical careers that have ladders, so I wouldn't cite it as a well-known counter-example. > I've yet to see any tech union advocate for this posit…

> With regards to the Tech Workers Coalition, they want "explicit criteria to achieve (promotions)" [1] which would necessarily involve more red tape and likely a seniority-basis, as not every employee can be promoted.

I don't see how this follows. Much the same way that you can have transparent pay even though people are paid differently, you can have transparent promotion criteria that aren't simply "John has worked here longer".

I am absolutely able to recognize that the more senior ICs I work with have larger scopes of work and often more challenging projects. My reading of this is that there should be clear job ladders that are used and checked against during promotions (and for example you're given feedback stating that XYZ is why you aren't performing at th e next level yet).

Google, for example, is aspirationally already doing this. There's a job ladder and you're rated agains the ladder. In my case, this has meant that I've gotten promoted almost 2x as fast as some of my coworkers on my team.

The aspirational part is that sometimes the feedback isn't in line with the rubric, and criteria can be different across the company (this is sort of a necessary evil of having a big company, a 1-size-fits-all rubric is difficult.)

I'm honestly, really not sure how it follows that since not everyone can be promoted you must use tenure as the metric. As long as you can define some set of criteria that defines "Senior" vs "Junior", you should promote all of the people who meet the criteria. If that's all of your employees, perhaps you need to rethink the criteria, or perhaps you have a bunch of "Senior" employees. At that point, deciding which ones to not promote is going to be crappy no matter what: tenure is an option, but the alternatives are usually "who the boss likes the most" which isn't really any better. But again, this comes down to at this point the company has failed to provide explicit criteria to achieve promo, because people who achieve them aren't being promoted anyway.

Re: Golden Handcuffs

#140

Post by Trumpi »

If my base salary is competitive, and I get vesting grants on top of that, then I don't see it as a bad thing.

If the vesting grants are an excuse to underpay me, then that is a bad thing.

An employer's perspective is different to mine, and some companies cannot compete by offering grants. This is probably what this article is really about.

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