Ask HN: Comparing a C-level equity-based offer to my salary-focused current comp
1 comments
I'm not a C-level exec, don't know the difference between a C-level and President title and this is way more than I get paid, but the new offer seems reasonable, particularly if the 50% target bonus is a reasonable target.
I think you may also be undervaluing the equity significantly. IPO/sale timelines are getting longer (hell, you say they did a Series G! round), but there is likely to be a private market for the stock at this point, and since they're giving you what is ~300k in stock compensation/yr on paper, it shouldn't be hard to get enough value out of that to eclipse your previous comp, and this number should basically grow year on year if the company continues to grow.
I wonder how you feel about the severance situation; my impression was that large severance for C-level positions was due to the difficulty of finding another one if things fall through, and yet the startup offer doesn't have the severance kick in for 12 months, which is when it probably most likely to not work out.
I have a hard time imagining a Series G company without a 401k, do you mean they don't do a match, or have they really managed to go that long without setting one up for employees?
But anyway, the package seems fine to me, if this company works out and you succeed there; the biggest risk to me seems like something going wrong and you part ways before 12 month are out and you don't get any ISOs and no severance and no bonus. So it basically sounds like it could be a 50% bump, but only if you can execute the way they expect you to and a very bumpy ride otherwise. I would be more concerned about how good a fit you are for the role than the exact comp.
I think you may also be undervaluing the equity significantly. IPO/sale timelines are getting longer (hell, you say they did a Series G! round), but there is likely to be a private market for the stock at this point, and since they're giving you what is ~300k in stock compensation/yr on paper, it shouldn't be hard to get enough value out of that to eclipse your previous comp, and this number should basically grow year on year if the company continues to grow.
I wonder how you feel about the severance situation; my impression was that large severance for C-level positions was due to the difficulty of finding another one if things fall through, and yet the startup offer doesn't have the severance kick in for 12 months, which is when it probably most likely to not work out.
I have a hard time imagining a Series G company without a 401k, do you mean they don't do a match, or have they really managed to go that long without setting one up for employees?
But anyway, the package seems fine to me, if this company works out and you succeed there; the biggest risk to me seems like something going wrong and you part ways before 12 month are out and you don't get any ISOs and no severance and no bonus. So it basically sounds like it could be a 50% bump, but only if you can execute the way they expect you to and a very bumpy ride otherwise. I would be more concerned about how good a fit you are for the role than the exact comp.
Great input. To answer your questions.
- There is no 401k but the idea is to put one in place by end of year per leadership - There is no private market in place yet but that is also meant to change end of year; I am not entirely familiar with the concept and how this impacts the comp evaluation - Re: severance - agreed that I am taking all the risk here given my current severance and I would need to see at least a 3 months severance in the first 12 months - Historically all my employers over-promised on bonus payments; is it legitimate to ask for their track record on target bonus payments on the C-level? - Great point on the fit; I consider it strong and am closely aligned with the vision of the company so that is a big plus
- There is no 401k but the idea is to put one in place by end of year per leadership - There is no private market in place yet but that is also meant to change end of year; I am not entirely familiar with the concept and how this impacts the comp evaluation - Re: severance - agreed that I am taking all the risk here given my current severance and I would need to see at least a 3 months severance in the first 12 months - Historically all my employers over-promised on bonus payments; is it legitimate to ask for their track record on target bonus payments on the C-level? - Great point on the fit; I consider it strong and am closely aligned with the vision of the company so that is a big plus
> There is no private market in place yet but that is also meant to change end of year; I am not entirely familiar with the concept and how this impacts the comp evaluation
A company may decide to join/setup some private market to make it easier for insiders to sell their shares, and also know the price being offered for them, but this is not a prerequisite to selling shares. Even if the company doesn't follow through, you should be able to sell your shares to a private buyer. It's a pain in the ass and the company has a right of first refusal, but with 98% certainty you will be able to turn stock in a late stage company into cash.
> Historically all my employers over-promised on bonus payments; is it legitimate to ask for their track record on target bonus payments on the C-level?
I definitely think it is fair to ask about track record, but you should also ask how you will be evaluated. I don't know if there are clear targets in your line of work that you will be measured against or not, but it might be clearer how achievable that is depending on how they plan to evaluate your performance wrt targets.
I've found US companies to be surprisingly good at paying bonuses to engineers, though they are not 50% bonuses so maybe they don't care as much to play games.
If I were you I would get to know how pre-IPO stock works in a bit more detail, it's a very big part of this offer. Assuming the numbers you have are right it's ~280k/yr in ISOs. The biggest question you should answer is where the $9 came from. If they just took the headline valuation number from their last funding round and divided it by the number of shares, it is probably an over-estimate since investors over-pay in terms of valuation to secure downside protections like liquidation preferences. You should learn what liquidation preferences are; you could try ask the company about what liquidation preferences/etc investors have, and maybe they'll even tell C-level hires :)
Depending on how much research you want to do, you could try and do some research on how much a private investor would pay for shares in the company now to get an accurate view of how much the stock is really worth today. But this might be getting in to the weeds. You could ask the company too, though I dunno how much help they would be. Most companies internally price some optimism into their ISOs when handing them out.
A company may decide to join/setup some private market to make it easier for insiders to sell their shares, and also know the price being offered for them, but this is not a prerequisite to selling shares. Even if the company doesn't follow through, you should be able to sell your shares to a private buyer. It's a pain in the ass and the company has a right of first refusal, but with 98% certainty you will be able to turn stock in a late stage company into cash.
> Historically all my employers over-promised on bonus payments; is it legitimate to ask for their track record on target bonus payments on the C-level?
I definitely think it is fair to ask about track record, but you should also ask how you will be evaluated. I don't know if there are clear targets in your line of work that you will be measured against or not, but it might be clearer how achievable that is depending on how they plan to evaluate your performance wrt targets.
I've found US companies to be surprisingly good at paying bonuses to engineers, though they are not 50% bonuses so maybe they don't care as much to play games.
If I were you I would get to know how pre-IPO stock works in a bit more detail, it's a very big part of this offer. Assuming the numbers you have are right it's ~280k/yr in ISOs. The biggest question you should answer is where the $9 came from. If they just took the headline valuation number from their last funding round and divided it by the number of shares, it is probably an over-estimate since investors over-pay in terms of valuation to secure downside protections like liquidation preferences. You should learn what liquidation preferences are; you could try ask the company about what liquidation preferences/etc investors have, and maybe they'll even tell C-level hires :)
Depending on how much research you want to do, you could try and do some research on how much a private investor would pay for shares in the company now to get an accurate view of how much the stock is really worth today. But this might be getting in to the weeds. You could ask the company too, though I dunno how much help they would be. Most companies internally price some optimism into their ISOs when handing them out.
Thanks again!
> You should be able to sell your shares to a private buyer.
Is there a particular "terminology" to this ability I should ensure I confirm with the company?
> you should also ask how you will be evaluated
Great point and on my list.
> The biggest question you should answer is where the $9 came from.
It is indeed the number from the latest founding round 2 years ago so I assume it to be high.
> you could try ask the company about what liquidation preferences
Assuming this relates to preferred stocks and if they have been issues to investors? On my list of questions.
> Depending on how much research you want to do, you could try and do some research on how much a private investor would pay for shares
Any idea how you would go about it?
Thanks again for your great input. Much appreciated.
> You should be able to sell your shares to a private buyer.
Is there a particular "terminology" to this ability I should ensure I confirm with the company?
> you should also ask how you will be evaluated
Great point and on my list.
> The biggest question you should answer is where the $9 came from.
It is indeed the number from the latest founding round 2 years ago so I assume it to be high.
> you could try ask the company about what liquidation preferences
Assuming this relates to preferred stocks and if they have been issues to investors? On my list of questions.
> Depending on how much research you want to do, you could try and do some research on how much a private investor would pay for shares
Any idea how you would go about it?
Thanks again for your great input. Much appreciated.
I feel I am at a new learning point right now as I am considering a C-level role for a series G startup I really admire.
Below is what my current package looks like today as well as what the initial offer of the startup company stands at.
Through my naive eyes it feels I would be falling short quite a bit in the new environment wrt compensation and taking on a lot of the risk (with an IPO/sale uncertain for decades)
My mindset is I would need to negotiate the offer quite a bit up with respect to base to make it feasible and more comparable. However, ppl more familiar in the startup industry consider it a moderate offer even against what my current package looks like right now.
Knowing a lot of it comes down to personal preferences, are there any individuals here that can give a rough qualitative assessment how they'd compare the two aspects and what negotiation items to potentially prioritize - happy to provide any clarification as far as anonymity is retained. Also, if there is anything missing I should make sure is clearly defined I welcome any input.
State: California
Current:
New: