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Golden Handcuffs

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Re: Golden Handcuffs

#231

Post by hef19898 »

dehrmann wrote: post #222
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…

> Do not support investor-focused comp models like backweighted vesting (Amazon) This is from ~7 years ago, but my backweighted Amazon RSUs were balanced by a signing bonus, and another signing bonus a year later. Roughly, my total comp would be similar each year if AMZN stayed the same price, so it felt fair.

And, at least in my case, the sign on bonus and number of RSU was calculated based on some long-term estimation of stock price done by Amazon. That wasn't only done for compensation purposes. Obviously, having started in 2014 that estimation worked out rather in favor of employees. You could even see the impact rising stock prices had on variable compensation in the Amazon reporting for, if memory serves well, 2016 and 2017. Being surprised by the huge valuation increase in the last years was rather expensive for Amazon.

Overall, I considered the Amazon approach fair. But then I never considered the sign on bonus nor RDIs as part of my everyday salary, for me it was rather a bonus to be put away to be used when absolutely necessary. Allowed me to boot strap since Oct. 2019. Unsuccessfully so but that has hardly anything to do with Amazon.

Re: Golden Handcuffs

#232

Post by hef19898 »

voidfunc wrote: post #78
kemitche wrote: post #46

Earlier quoted context omitted.

Did Amazon return to back-weighted comp? The offer I received two years ago had comp that shifted from "cash focused" to RSUs over 4 years, and had equivalent cash value over the 4 years. Obviously, by year 3/4 when comp was mostly/all RSUs, the stock could have gone up or down significantly. Given that the year 1 cash could be used to buy stock if I really wanted, it didn't seem an unreasonable approach to comp to m…

I definitely know some people on the 10/10/40/40 Amazon comp plan... also seems to be a common tactic to PIP people just before year 3 vests. Fuck Amazon. I'll never work for them.

Oh they definitely became more aggressive with PIPs around 2013 and 2014. But then they were surprised that stock rised by 100%+ in that tome frame, so RSU based comp got really expensive. Not that this would have been a valid reason to PIP people in order to replace them with people on new contracts, but at least I get where they came from. Generally speaking, the 10/10/40/40 plan is fair. And also takes into account that most people leave somewhere between year 2 and 3 anyway, PIP or not.

Fun fact: timing internal transfers with review cycles, especially the mid-year one employees are hardly ever informed about, can avoid getting PIPs. In the first 6 months a new department doesn't review employees (at least didn't back the day) and in year one people don't get PIPs. So switching departments after the first full review, but before the mid year one, avoids being PIPed mid year. And the first end year review. The second end year review in the department hardly ever results in a PIP, so one can change again departments before the upcoming mid year review (the first with a real risk of being PIPed). Rinse and repeat. Took me too long to figure that one out so. In hindsight, I know quite a few people who managed to pull that off. Of course being part of a feed-back rings also works wonders.

Re: Golden Handcuffs

#233

Post by delusional »

sombremesa wrote: post #199
nonameiguess wrote: post #131

Earlier quoted context omitted.

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, wha…

> 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. And what about your part in this play? The brand is valuable because of its fans. I assume you continued to support this brand, and by extension, this man you seem to despise. People like yourself directly contributed to…

I think the point is that if the team got more valuable while he owned it, it certainly wasn't from his contribution. Maybe that money should go to the people who actually did the work that made it more valuable.

They aren't saying the team shouldn't exist, or be more valuable. They're saying he shouldn't get the reward, just because he was the capitalist at the top.

Re: Golden Handcuffs

#234

Post by WJW »

michaelt wrote: post #230
WJW wrote: post #226

Earlier quoted context omitted.

Isn't that exactly what "risk" means in this context? Sometimes you get very rich (see the early google/microsoft employees), usually you get nothing or almost nothing. If you don't want to play the lottery there is nobody forcing you to work at startups.

If you were promised 0.1% of the company and the company ends up worth $0, that's just the risk of taking equity. If you were promised 0.1% of the company then some financial shenanigans with 'dilution' or 'liquidation preferences' mean the company gets acquired for $200,000,000 and you don't see any of it, then you got taken for a fool.

Yes, if you don't know the rules of the game you will often lose because you did not see some (legal) move coming. Investing is the biggest game in the world and big boy rules apply. People who are unable or unwilling to learn how options and startup equity work should not take payment in equity, because they will get cleaned out as predictably as a drunk guy at a poker table.

Re: Golden Handcuffs

#235

Post by pydry »

lukevp wrote: post #115
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…

I think you’re hand waving away that money is a store of value, and indirectly of time spent. The money investors have also came from them creating value by doing some activity. It doesn’t materialize independently. And it is still a risk to lose that money that they earned by trading their own time in the past.

>I think you’re hand waving away that money is a store of value, and indirectly of time spent.

Not if it's as a result of natural capital gain, dividend on shareholdings, interest, inheritance or rent.

In those cases it does materialize independently of time.

Taxes are typically lower if you didn't labor for your money too. Probably because large political donations are not typically made by people who worked for their money.

Re: Golden Handcuffs

#236

Post by mavelikara »

908B64B197 wrote: post #65
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…

Anything other than the rate at the main campus is not a serious offer.

Many immigrants working at SV HQs would love to relocate to the offices in their home countries with the same pay.

Re: Golden Handcuffs

#237

Post by calderwoodra »

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…

Did I read Ben Kuhn's article right? For engineers at almost every level (except maybe right out of school), they can easily make 100k/yr more by choosing a big co. So if money is all you're optimizing for, it's never worth it to choose a startup unless you're very risk adverse.

Re: Golden Handcuffs

#238

Post by xyzelement »

wuschel wrote: post #228
xyzelement wrote: post #144

Earlier quoted context omitted.

Jobs are less cookie cutter than your post implies though, especially at the higher levels. Personal example - my last job (hedge fund) really wanted me. It took them forever to find someone of my profile - a mix of background, technical skills, domain knowledge, and personality so they wanted to have me. The way they set my salary was like this: they looked at what I was making and added enough on top that I couldn'…

> a mix of background, technical skills, domain knowledge, and personality What kind of position did you get hired for? An IT related role, or something more exotic? If it is the latter, I would be delighted to have a chat if you would be interested. See my contact details for my profile.

I am in product but my background is in engineering management.

Re: Golden Handcuffs

#239

Post by andrepd »

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.

My, if only there were an economic philosophy based on that. Some kind of "social"-ism...

Re: Golden Handcuffs

#240

Post by andrepd »

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…

You are justifying a system with the system itself. Why does it have to be hard to access capital? Worse that hard, why is there a very very tiny number of (undemocratic, unaccountable) people deciding who gets to access capital?

Why couldn't we think of a more democratic way of allocating credit/capital/finance to people and businesses?

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