Hacker News Reader

Comment by bettercallsalad | Hacker News Reader

Can confirm. I am getting above average number of recruiter messages.

However, this last cycle of layoffs have taught me something. It is 1) the whole chase to Total compensation isn’t worth it, it matters the stability of the organization and the overall value of the work that we produce. To that end, stock compensation is really not to be relied upon at its face value. My total compensation in 2022 was less than 2020 when I was working as a new hire 2) if a company starts hiring to the point where you are taking more and more interviews every week without any real explanation behind the hiring, it’s time to GTFO.

View on HN

> stock compensation is really not to be relied upon at its face value.

This is a fantastic realization to have. Getting stock as compensation is a bit like getting lottery tickets as compensation. This is triply true if they're options rather than actual stock.

I learned decades ago to ignore the stock component of compensation packages when evaluating an offer. I'll never turn stock or options down, but they will also never be something that will "tip the scales" for me.

Is there a technical difference in considering an RSU to be a stock option with a $0 strike price?

RSU have immediate tax implications, while options may not (and mostly do not) until time of exercise.

You pay taxes when RSUs vest. You pay taxes on options only when you exercise them. In addition, when the RSUs vest, they are yours when you leave the company, with options you have to exercise within a time period (a short one if it's an ISO, potentially 10 years for NSOs).

Stock in a large publicly traded company is a lot different than options in startup.

I definitely think it makes sense to apply some discount to stock compensation when comparing offers, but if stock in a large publicly traded company is very likely worth something.

The two are definitely different, yes. But I ignore both of them anyway, personally. It's very hard to know what the future value of any stock (even in a large publicly traded company) will be, so it's very hard to figure out how to translate that into value in terms of compensation.

Just pick some conservative discount like 50% of the current value. Your average large publicly traded company is unlikely to dip that far and not bounce back.

That's fully reasonable, yes. It's not my style, but there's nothing wrong with it.

TWLO has left the chat. (it was down about 90% from peak to trough)

(as have many other names, not to pick on twlo specifically). I actually think (and so far am right) that it was massively undervalued at $45 a share.

I think this is perhaps overly pessimistic. In general if you are getting RSUs and the share price tanks, you’ll get bumped back up with a refresher grant.

The big public companies are making sure that your annualized total comp is in the right range, because if it isn’t (so the assumption goes) you’ll just move to another BigCo that will cut you a fresh grant at market rate.

that is a very California way of looking at it. Non-competes don't work that way in a lot of places, and few companies outside of the largest would deem to throw that kind of compensation at people if the stock falters -- and only for certain tiers of employees.

IBM would just fire you. Ditto for most of the other F500 sphere.

Fair. Perhaps I should be more specific: if your RSUs are <= 10% of total comp, as you say the employer might not top you up, and so conservative rounding down may be more reasonable. If your RSUs are closer to 50% of comp, rounding to zero will unreasonably hurt your comp comparisons, both by sheer magnitude of the grant, and because employer will definitely be conscious of regrants.

Not all CA tech companies give huge RSU grants, but the biggest ones tend to.

I think there needs to be a distinction between options in a series A startup and RSUs in a large (but still private) company. I don't value the latter at zero since the chance of a liquidity event is much higher and RSUs mean there is no need to actually purchase the options when you leave the company (and risk all the tax problems that go along with this).

I roughly value RSUs in a late-stage private company (say, Stripe) at 50%-75% of market value when considering an offer, while a very early stage options grant is almost worthless to me, say 5% of its value.

This doesn't work for a lot of mature tech companies. RSUs are as good as cash at vest time, but the delay between grant and vest basically leaves you with variable pay. You can't just ignore it though, since the targeted value of your RSU compensation alone will be higher than base pay in many cases.

> You can't just ignore it though, since the targeted value of your RSU compensation alone will be higher than base pay in many cases.

Sure you can. You just gauge based on the base pay alone. If that's adequate, I'm good to go. If it isn't, then I'm not. That way, I'm not hurt if the stock ends up being worthless.

I may be leaving money on the table, of course, but I'm also eliminating unnecessary risk. Other people may have different risk tolerances, naturally. My main point is that counting stock as part of a compensation package is the same as buying stock -- you need to be aware that you're taking on risk.

In using that strategy, you're trading one risk for another risk, not eliminating risk.

What risk am I taking on?

The risk of foregone upside in expected value (or, alternately, expected utility) to the extent that you are mis-valuing one of your genuine choices.

If Netflix is going to pay you $200K/yr and Facebook $180K plus $400K in FB shares vesting over 4 years, IMO, it's an error (IMO) to conclude that Netflix's offer is $20K/yr more than Facebook.

Ah, OK.

I don't consider that a risk at all, but I get that others might. This sort of thing is what makes acceptable risk evaluation such a personal thing.

To me, "risk" means that income I'm expecting doesn't happen. The risk you're talking about doesn't count as risk to me, because any money left on the table is money I wasn't expecting to get in the first place, so I haven't lost anything. I just failed to gain something that I could have.

I don't think my attitude is incorrect (it's saved me from a lot of actual loss over the decades), and I also don't think that yours is incorrect. It's more about what makes the most sense considering our personal situations, temperaments, etc.

I also acknowledge that I'm unusual in the HN crowd in that I am not primarily money-driven. When I'm considering a position, the compensation is the third or fourth most important consideration, not the first.

You can talk about it opportunity. You might apply a (heavy) discount to that opportunity, sure, and personally I agree it's not a "loss" if you choose it away, but it it is an opportunity that has a value even if you decide a 100% discount is the right value.

I'm reasonably money-driven, but I also heavily discount the value of stock or options, because while I've come out ahead on my shares and options in almost every company I've worked in, the effective return has ranged from very decent multiples of the initial valuation to 1% of it, so I'm very comfortable applying a very high discount (reducing said discount for e.g. listed companies - but one of my best returns was from a listed company where the best engineer on my team was still under water on the vast majority of his options 7 years in, and now long after their expiry the price has never been as high as then)

I completely understand having a low risk tolerance. But I think discounting stock offers by 100% is going further than is reasonable even for the most risk averse person.

Put it this way, at the limit. Company A pays $120k + $1,000,000 dependent on the result of a random number generator where there is a 99.999% chance that you'll get the money. Company B pays $125k. All else being equal, any rational person would obviously choose Company A.

But if you're saying you discount variable pay by 100%, you would choose company B.

Or think of it another way. How much are you willing to pay to avoid loss. What you're doing is equivalent to buying insurance to avoid loss. How much would you pay for such insurance? There has to be a limit.

Since you evaluate based on pay alone, next time you judge two or more offers with public equity, let me unconditionally buy all your equity for $5K. That should tip the scales if the base is the same.

I think that you're conflating "not taking it into account when evaluating the offer" with "not caring about it at all".

What I do is the same as the commenters who say they discount the face value of stock when assessing the compensation. I just discount it more deeply than they do.

If you aren’t willing to sell the equity for $5k then we’ve found the lower limit of how much value you place on it. Meaning that you should be considering at least $5k of that equity when comparing compensation.

Stock at a big tech company is incredibly unlikely to suddenly end up worthless. Let's say your base pay is $160k and you have $240k in RSUs vesting each year. It would be ridiculous to take another offer of $250k or $300k cash elsewhere. Maybe at $350k you might prefer straight cash. Someone else's cutoff might be at $375k.

In the end, you can't ignore it.

Netflix dropped >70% in six months in late 2021/early 2022. That $400k total comp package would suddenly be $230k or so -- less than the $300k cash offer. I recognise Netflix offers are usually all-cash, but it's an illustrative example. Feel free to substitute with Facebook stock.

As a bit of real-life anecdata, I knew someone who struggled to pay their mortgage when AMZN dropped ~30% in 2018.

The real trick is to realize that having a 4 yr grant valued at present value is tough. only hindsight can give you a perfect picture of what you were compensated. This is partly why folks should always be selling at least a portion of their equity and shifting it into other assets smoothly as they vest.

My middle ground was to sell ~50% of my vesting meaning I took some risk off the table, but also wouldn't feel left out if it moonshot. People with economics (game theory) degrees likely could figure out a better way to deleverage + prevent fomo.

Or the company is in a slump and decides to downsize you a week before your RSUs vest.

That’s possible, but after the 1 year cliff assuming quarterly vesting you’re only going to be out at most 3 months of “earned” stock.

Either way you just figure the chance of losing all or some of it into your expected value calculation.

Annual vesting, and got nothing.

So at worst you were out just under a years worth equity pay. That seriously sucks, but it is possible to build that into expected value. Expected stock value * (1 - likelihood you get laid off).

I could have written your comment verbatim!

It depends on how big the TC difference is. If you can make 2x working at a more volatile company, you can stash away the extra to get through hard times.

I would also only count TC in the first year (or 6 months), not some stock options that vest in year 2+.

It generally takes ~2 years to actually turn your unstable stock into a stable dollar value. As many who joined Square (Block now lol) learned - your idiot CEO can tank your money printing machine at any moment, and while your stock may have quadrupled since you started it's just one dumb move away from dropping a ridiculous amount, and all before you could actually turn any of it into a dollar.

+ WLB is worth a lot more than we realized, as evidenced by people happily taking a 20% cut for better WLB.

Compensation matters, don't lose sight of that goal. Technologists contribute an outsized impact to the profits of technology companies. We should be fairly compensated and its on each of us to push for it.

So you would gtfo from 2001 google or 2013 uber? Scaleups are totally fine if you have revenue to support it (right now not at some unspecified future date). Many companies that scaled in 2020-21 just didn’t

Counterexample: Pets.com cost of goods sold would go quicker than their revenue. Similarly, many companies inflate their revenue in all kinds of ways including excessive marketing spending.

This time we didn’t really have that. It was pretty meh revenue numbers across the board and a lot of spending

How many people joined Uber in 2013 vs in 2017-18ish or such? What was the breakeven point for it to be worthwhile?

It's easy to be late to the party these days if looking at gaudy Series B/C/D numbers and stock-based comp.

> the whole chase to Total compensation isn’t worth it

I always flat out tell recruiters that while total comp matters, when comparing I always heavily discount anything not in my basic. Of course how much depends on details (e.g. I discount options to near zero; RSU's much less so), but some parts of total comp will rarely enter the picture when I evaluate an offer unless the basic salary is already good enough.

I'll expect a good total comp, but not at the expense of a low basic salary.

Total Comp is the important thing, but calculate it using your own methods.

No your 'health insurance' plan isnt worth $24,000/yr, I can get that same plan on healthcare.gov.

No your stocks don't count, the vesting period is too long.

No I'm not going back to school, I already have a grad degree and I'm not doing that again.

> I can get that same plan on healthcare.gov.

But not 100% paid for right? And it might cost $1000-2000 depending on your family size.

> No your stocks don't count, the vesting period is too long.

This one I totally agree. And even if you vest, if it's a startup you're mostly locked in and can't sell them, and without liquidity they're basically worthless.

>But not 100% paid for right? And it might cost $1000-2000 depending on your family size.

Its the same plan, often worse.

Anyway, you can even calculate the value of that plan, say the cheapest healthcare.gov plan costs $1000/mo, you get it free through work, that is $12000 per year of compensation. Pretty substantial, although I've never seen someone get a free plan at work, though a union firefighter pays $20/mo and is harshly underpaid. For the max out of pocket, you can multiply that by the chance of hitting it per year.

But what really matters is the delta cost. Healthcare.gov is quite comparable to w2 jobs. Its often significantly better since you can shop around instead of the corrupt plans the company was sold by some insurance dealer.

> Can confirm. I am getting above average number of recruiter messages.

Is this the US? In Canada, my inbox is still empty relative to 2022 and earlier. I used to be so annoyed by all the recruiter spam I got, and now I'd love to have it back.

Definitely describes my time at AWS between 2016 and 2022.

Reply on news.ycombinator.com