No sane person (or nobody with more than three years in the industry) counts equity comp in with base compensation.
On the other hand Equity is startup is completely different thing and should be heavily discounted.
That's not the way Amazon vests your stock, unless things have drastically changed recently. They vest in single lump sums for the year, and they have a slowly ramping up vesting schedule.
First year, nothing (but they give you straight money bonus) Second year, barely anything, but they give you some cash to "offset". Third year, good bunch of the stock, but still less than half. Fourth year, all the rest of the stock vests.
Within each year you should get some stock offering, on the same ramping up basis so the idea is after the fourth year, you have consistent RSUs vesting, and they'll probably be split over the year based on whenever Amazon gave you the stock offering.
But it still should be modeled far above zero, and far closer to cash than pre-ipo options.
For very few companies. Most companies - even tech companies have annual vesting (so 25% every year). And Amazon has 5% vesting after the first year.
And even if they don't, there are lots of ways to find yourself in a toxic workplace. If you're depending on that vesting schedule, your life can suck as you're trying to wait out an arbitrary deadline.
If you treat vesting as a nice optional bonus that you don't plan on, neither situation will feel bad to you.
I had the wonderful experience of being hired at Google many years ago, and pulled into an SRE role. I was in the roughly half that they do that with that don't work out. And I didn't work out for exactly the reason that I initially expressed doubts about. (I don't task switch that fast - not a problem in a SWE but a major problem for an SRE.) I was let go 5 days before my 1 year cliff.
That is one of the reasons why I, personally, discount equity compensation.
Google and Facebook don't anymore. You start vesting right away.
However, you might need to pay back part of relocation money, if you leave before two years mark.
I personally discount equity at 40%. So you can offer me $300,000 cash or you can offer me $150,000 cash and $250,000 RSUs and I'd consider those equal offers.
> And stocks tend to go up
Only lately. Stock compensation sucked around 2001 and 2008.
Assume that there is a job market with lots of jobs. Each will hire you for your market-rate total compensation, no stock cliffs, no job-seeking costs. Spherical cow. Say also that you can tell the variance on stock compensation, but you can't guess at future performance.
One strategy might be to go to an all-cash job and make your market rate forever. That's a lower-bound on the best expected future earnings. But a better strategy is,
- Join a high-variance company,
- If/when your pay drops below the market, find another high-variance company.
With this strategy your expected earnings are higher than your market rate, even if the expected earnings at every job is the same. And the outperformance scales up with the variance.
But I live in the real world. And in the real world, you can't switch jobs instantaneously back and forth, like you can trade stocks. In the real world there may not be a job available at the market rate. In the real world it takes months to find a new job even if there is one, and then it's even harder to actually get market rate.
So in the real world it make more sense to discount stock compensation compared to cash compensation to account for all of these things and the risk you take on by accepting stock based compensation.
You shouldn't trade away a dollar's worth of shares for 60 cents more salary just because of taxes.