Ask HN: FAANG employees, how are the recent stock declines impacting you? | Hacker News Reader

Ask HN: FAANG employees, how are the recent stock declines impacting you?

19 points_m96l20 comments

The past decade has been very good for tech stocks, in particular for FAANGs where constantly rising prices bolstered generous compensation packages. Very strong stock performance has helped recruitment, morale, and retention in FAANGs.

However, now the RSU-heavy compensation policy is being tested, with Facebook and Netflix down over 33%, Amazon declining over 25%, and Google declining 20%.

For many employees, and especially engineers, these declines translate to severe compensation cuts.

What is the impact of these declines on you and your co-workers?

Is your employer responding in any way to the fact that your compensation is suffering deep cuts?

Are there any observed or expected impacts on recruiting, retention, and morale, particularly as RSU-heavy compensation packages lose some of the fairy-dust they carried for so long?

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Being down X% after a pretty serious bull run isn't really a big issue.

I'm not relying on stock sales to fund general living expenses, rather the stock tends to be more about savings, since the base is pretty generous as well. So it's not really top of mind for me

It generally doesn't come up on our team tbh.

I realize the declines likely don't impact living budgets, for the reasons you stated.

However, I am wondering about issues like morale, and especially recruiting and retention.

As you know, competition for talent is quite intense right now, especially for the kind of talent FAANG employees have. You see it both in attempts to recruit new and current employees.

I'm wondering if there's any increase in poaching, or tougher competition on new talent against employers offering more of a cash component.

Of course, some of these effects may only be apparent in a few months, once year-end bonuses are paid.

Anecdotally, compensation is much more of an issue for new hires than existing employees. I've also just seen far more internal movement, both to and from our team, than I have people leaving to other companies, though our team has been growing and getting external hires too.

The best time to buy is after a dip in the price.

That's why you should always negotiate hard on the base salary and signing bonus. These are guaranteed money not like RSU's.

To answer your question, simply switch FAANG's when the market is down so you enter at a low price. That's what I've seen so far...

> That's why you should always negotiate hard on the base salary and signing bonus. These are guaranteed money not like RSU's.

The two FAANGs I have personal experience with aren't very flexible when it comes to base salary, though. In both cases, during offer negotiations, I was told the base salary is strictly tied to levels of seniority in the organizational hierarchy, so there's effectively no room for maneuvering there.

RSUs were much more flexible, especially after the first couple of years.

RSUs were also a more important part of the compensation. My initial package in one FAANG was about 55% RSUs, 45% cash, and I was told that going forward my RSU component will increase even further, and in particular most bonuses and raises will be granted in RSUs.

So I'm not sure "negotiating hard" is a viable strategy in FAANG compensation discussions. They can be quite generous with RSUs, but cash policy is often strict and inflexible.

I think most people have taken it pretty well, since a majority of employees got their grants priced before the bull market of the last few years. It does really suck though if your grant was priced in August (like mine), which is an instant 20% pay cut.

I don't work at one of the named companies, but do work at a company with RSU-heavy compensation that is currently down some 25%. It seems that many of my coworkers are considering now that our compensation is cut, but that we are getting cheap grants now. Our grants are sized as a percentage of our base salary divided by the current price. Today's stock grants will be worth just as much as past ones but they will have the advantage of higher growth potential with market gains.

So, your response is that these declines don't affect you very much since you have faith in future growth of your employer's stock value to compensate you for the current slump.

(Your current grants are only "cheap" and valuable if you expect the stock price to not only bounce back, but also go higher in the foreseeable future.)

Not quite. Let's use Amazon as an example. If I believe the market price of Amazon should be 2k, which I believe it's hit, or at least gotten within spitting distance of, this current drop could be called a temporary dip (I'm not saying I necessary hold this view, but to demonstrate).

Since Amazon is currently trading at 1.5k, if I get granted 30k in stock, I get 20 shares instead of 15, which when the stock returns to it's correct price, will now be worth 40k. I make 10k, just due to the bounce.

Now this is impacted by a lot of specifics about how your are granted stock, options, or rsus, but that's the idea.

Sure, I totally agree with that.

My comment was just to the effect that GP's comment implies that belief, i.e. that their employer's current stock price is undervalued (like how AMZN is currently trading for $1.5k but is actually worth $2k).

Had they believed the stock is currently fairly priced, there's no reason to call these RSUs "cheap" or expect much excess return on them at vesting.

Worst case scenario: if they're still overvalued, then further declines can be expected, and any grant denominated by RSUs is actually worth less than its nominal cash value.

I don't know where you work, but as someone who has been in the industry 20 years - keep in mind - stocks don't always go up, and stocks can go to 0. I agree in general that getting more shares is better than getting less, but it's not a guaranteed win.

That's a good comment. The best case scenario for tech employees is that this is just a temporary correction, and the bull market will resume after this short break.

This seems to be the implicit assumption in GP, for example.

However, there's no certainty that will be the case. The next few years could be a sustained bear market, in which stock prices appreciate very modestly.

And while I wouldn't worry about stocks "going to 0" at a big corporation like Amazon, it's certainly possible for the smaller tech companies.

While it's generally a good rule of thumb for stocks, we're specifically talking about FAANG stocks here. None of those are going to zero ANY time soon.

If they go to 0, we probably have an immediate global crisis on our hands. We're not talking about hyped startups here, we're talking about mature, global organizations that have fueled society's growth for the past 2 decades.

Increases and declines are less interesting unless there is a structural issue with the company. It's if the stock price stays flat which is when you should be concerned... buybacks etc... lack of growth.. things like that need to be considered.

There's a good chance that after a very long bull market, we are entering a bear market in which stock price will stay flight or even slowly decline for a long time.

P/E ratios are too high, particularly for tech stocks, and the entire US equity market will eventually have to go through a bear market.

The only one down in the past year is facebook and not by much. If you are only looking a few months back in the stock market, you are looking at it wrong.

Where should one begin? There are going to be new folks accepting offer from FAANG, where/when should they begin to look?

In a year or 2 when you are getting refreshers/compensation adjustments.

Netflix doesn't give stock so the stock price does not really effect them. All the rest will give you extra stocks if the stock price drops enough that it brings you below your target compensation.

Personally, I am waiting for GOOG stock to drop, partly in relationship to my essay.

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