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Y Combinator Compensation Numbers

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Re: Y Combinator Compensation Numbers

#21

Post by sokoloff »

milkshakes wrote: post #8
philip1209 wrote: post #2

For late-stage startups like this, RSUs are common instead of options. Because stock is issued rather than purchased (like an option), I don't think this is dishonest. (If a company valuation stays flat, stock options are worthless - but RSUs have value). Either way: A thing to keep an eye out for is startups that describe the compensation value of stock using the preferred stock price, but then issue you common stoc…

If anything, RSU compensation is worse than options because of the tax implications. With options you have the option of paying the tax before the appreciation of the equity. With RSUs, you pay at liquidity.

You are permitted by the tax code to make an 83(b) election on RSUs.

Very few non-founders do it, because it means you could end up paying tax (with the election) on shares that will never vest for you, but you do have the option to do so.

Re: Y Combinator Compensation Numbers

#22

Post by kokanee »

milkshakes wrote: post #8
philip1209 wrote: post #2

For late-stage startups like this, RSUs are common instead of options. Because stock is issued rather than purchased (like an option), I don't think this is dishonest. (If a company valuation stays flat, stock options are worthless - but RSUs have value). Either way: A thing to keep an eye out for is startups that describe the compensation value of stock using the preferred stock price, but then issue you common stoc…

If anything, RSU compensation is worse than options because of the tax implications. With options you have the option of paying the tax before the appreciation of the equity. With RSUs, you pay at liquidity.

As a W2 software developer, I've held options at three companies and RSUs at two. I've netted around $30K from RSUs, and netted a loss of $20K from options. Only once did my options "liquify," when a startup I had worked at was acquired. The proceeds were distributed entirely to preferred shareholders and employees were left with nothing, several of us having spent thousands to exercise.

I made my bed and slept in it, so I have no axe to grind, but going forward I will never accept options over any other form of compensation, given a choice.

Re: Y Combinator Compensation Numbers

#23

Post by altdataseller »

zerr wrote: post #10
hiddencost wrote: post #9

Keep in mind that the law only requires salary to be listed. Large companies typically only list salary, because it helps them hide the true compensation numbers.

Why don't they adjust the law so the total comp is also required to be listed?

Because it’s not exact. Nobody knows how much your stock/options/RSUs will be worth x months from now. But they know what your base salary will be.

Also, if I’m a candidate and the company has to tell me a number, I do NOT want to know the “total comp” because it might be 90% lotto tickets (ie startup options) and 10% base salary. Unless they explicitly break it down, I rather know the base salary

Re: Y Combinator Compensation Numbers

#24

Post by altdataseller »

zerr wrote: post #10
hiddencost wrote: post #9

Keep in mind that the law only requires salary to be listed. Large companies typically only list salary, because it helps them hide the true compensation numbers.

Why don't they adjust the law so the total comp is also required to be listed?

Report them to the CA state government. It’s legal only if they have < 20 employees

Re: Y Combinator Compensation Numbers

#25

Post by granshaw »

samspenc wrote: post #18
doctorpangloss wrote: post #17

[flagged]

Wait, I can't tell if you're being serious or sarcastic :)

In the ZIRP era esp going into 2021 this could be taken seriously, but those days are long gone

Average tech salaries have DROPPED to 2020 or before levels based on what I’ve seen lately

Re: Y Combinator Compensation Numbers

#26

Post by sokoloff »

altdataseller wrote: post #23
zerr wrote: post #10

Earlier quoted context omitted.

Why don't they adjust the law so the total comp is also required to be listed?

Because it’s not exact. Nobody knows how much your stock/options/RSUs will be worth x months from now. But they know what your base salary will be. Also, if I’m a candidate and the company has to tell me a number, I do NOT want to know the “total comp” because it might be 90% lotto tickets (ie startup options) and 10% base salary. Unless they explicitly break it down, I rather know the base salary

It's not even clear what they're worth at the moment of granting. There are multiple models for options valuation which have to be layered on top of multiple models for private share valuation.

Re: Y Combinator Compensation Numbers

#27

Post by zerr »

altdataseller wrote: post #23
zerr wrote: post #10

Earlier quoted context omitted.

Why don't they adjust the law so the total comp is also required to be listed?

Because it’s not exact. Nobody knows how much your stock/options/RSUs will be worth x months from now. But they know what your base salary will be. Also, if I’m a candidate and the company has to tell me a number, I do NOT want to know the “total comp” because it might be 90% lotto tickets (ie startup options) and 10% base salary. Unless they explicitly break it down, I rather know the base salary

The law could require listing of base salary, nbr of stocks/options/whatever, any other benefits such as PTO.

Re: Y Combinator Compensation Numbers

#28

Post by milkshakes »

sokoloff wrote: post #21
milkshakes wrote: post #8

Earlier quoted context omitted.

If anything, RSU compensation is worse than options because of the tax implications. With options you have the option of paying the tax before the appreciation of the equity. With RSUs, you pay at liquidity.

You are permitted by the tax code to make an 83(b) election on RSUs. Very few non-founders do it, because it means you could end up paying tax (with the election) on shares that will never vest for you, but you do have the option to do so.

fascinating! i have never heard of this. thanks for explaining.

Re: Y Combinator Compensation Numbers

#29

Post by temp_praneshp »

philip1209 wrote: post #2

For late-stage startups like this, RSUs are common instead of options. Because stock is issued rather than purchased (like an option), I don't think this is dishonest. (If a company valuation stays flat, stock options are worthless - but RSUs have value). Either way: A thing to keep an eye out for is startups that describe the compensation value of stock using the preferred stock price, but then issue you common stoc…

>(If a company valuation stays flat, stock options are worthless - but RSUs have value)

Can you help me understand why? I'd expect if you're granted options at a strike price of $Y, you will still make money as long as the valuation at liquidation time is more than $Y.

Re: Y Combinator Compensation Numbers

#30

Post by santoshalper »

milkshakes wrote: post #8
philip1209 wrote: post #2

For late-stage startups like this, RSUs are common instead of options. Because stock is issued rather than purchased (like an option), I don't think this is dishonest. (If a company valuation stays flat, stock options are worthless - but RSUs have value). Either way: A thing to keep an eye out for is startups that describe the compensation value of stock using the preferred stock price, but then issue you common stoc…

If anything, RSU compensation is worse than options because of the tax implications. With options you have the option of paying the tax before the appreciation of the equity. With RSUs, you pay at liquidity.

If you're reasonably confident they'll go up, options are better. The vast majority of startups are heading to zero.
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