Components of a Total Compensation Package

I serve employees at multiple public companies, including $META, $NVDA, $ACHR, $AMZN, $PD, $Z, $TEAM, and $GOOG. Here's how I help them master their stock awards ↓ ↓ ↓ Advising on equity compensation should be full-spectrum. It's not just "how much should I hold/sell". Equity can be a material portion of a TC package, which needs a comprehensive plan for managing it. First, we need to understand the various types of executive compensation.   Things like: || Restricted Stock Units || Stock Options (NSO vs ISO) || Deferred Compensation || Employee Share Purchase Plan (ESPP) ♦ Restricted Stock Units (RSUs) ♦ RSUs are company shares given to an employee as part of their compensation package. The shares are subject to a vesting schedule, typically based on the employee's duration of service. Example: An executive receives 1,000 RSUs that vest over four years. Each year, 25% of the RSUs vest, meaning the executive can sell the net shares or hold onto them for potential future gains. ♦ Deferred Compensation ♦ Deferred compensation is a portion of an employee's income that is paid out at a later date. Example: An executive defers $50K of their salary into a non-qualified deferred compensation plan, which grows tax-deferred and is paid out / taxed later. ♦ Employee Stock Purchase Plan (ESPP) ♦ ESPPs allow employees to purchase company stock at a discount, often through payroll deductions over a specific offering period. Example: An ESPP that offers a 15% discount on the stock's market price. ♦ Incentive Stock Options (ISO) ♦ ISOs give employees the right to purchase company stock at a predetermined price (exercise price) after a vesting period. ISOs get favorable tax treatment if holding periods are met; taxed as capital gains upon sale. ♦ Non-Qualified Stock Options (NSO) ♦ NSOs: Taxed as ordinary income upon exercise, then capital gains after that (short or long term). Example: An executive receives 5,000 stock options with an exercise price of $50 per share. If the stock price rises to $100, the executive can exercise the options and buy shares at $50, realizing an ordinary income hit of $50/sh. EXAMPLE of a comp package: ↳ Base Salary: $250,000 per year. ↳ Bonus: $100,000, contingent on company and individual performance. ↳ RSUs: 4,000 RSUs vesting over 4 years (1,000 RSUs per year) ↳ Deferred Compensation: $50,000 deferred annually into a non-qualified deferred compensation plan. ↳ ESPP: The executive participates in an ESPP with a 15% discount on the market price of the company's stock. ↳ ISOs: 3,000 ISOs with an exercise price of $75, vesting over three years (1,000 ISOs per year). ↳ NSOs: 2,000 NSOs with an exercise price of $75, vesting over three years (667 NSOs per year). Comp packages like this provide a mix of immediate cash compensation and long-term incentives. Managing it can be daunting and requires strategy to fold it into the larger financial picture...

Salary Week 5 of 5 - Total Compensation Pay attention to the whole offer. I know this is supposed to be #SalaryWeek, but there is so much more to what you receive from a company than just salary. For all the talent acquisitions folks, middle managers, execs - scroll on by. This post is for my newbies, my students, and people who have been told to take whatever is offered to them and don't ask questions. Friends, let me tell you a story about total comp. When you receive an offer, there's a number right up front that represents what you will receive in cash every 2 week, month, or year. Your salary. A lot of people only focus on this number, and whichever company offers higher they accept. If you're looking between a job that pays $70,000 and one that pays $80,000 it might seem like a no-brainer which is the better one. But what about the rest of the offer? Total #compensation includes all forms of pay and benefits an employee receives. It can include base salary, overtime pay, bonuses, commissions, benefits, and any other cash or non-cash compensation. What other types of value can you look for as part of an offer? - Starting Bonus - Paid Vacation or Flexible Leave - Bonus Percentage - Relocation or Moving Expenses - Remote or Hybrid Work - Equity, Options, Shares, Stock or Profit-Sharing - Healthcare Coverage - Retirement Matching - Maternity or Paternity Leave - Company Discounts When you think about your market value there are two things to know: 1. It isn't a number that is assigned to you, it's a number that you determine. 2. It should be based on Total Compensation, and not on just a salary. So when you show up to the next negotiation, don't just focus on the shiny $$$ on the front page - read the fine print and try to decide what the value is of the full offer. That $80,000 with awful health benefits, 5 days of vacation, and no bonus might quickly pale in comparison to the $70,000 offer with 20 days vacation, a 10% bonus and great dental (clean teeth are priceless). I know these can seem like obvious topics, but I really wish someone had spelled all this out for me in school. If you found this helpful, please interact, like, comment, and share with someone this could help. #SalaryIsntEverything #TotalComp

Base salary isn't everything. 9 things that make or break your next job offer. 1. What's the Total Compensation Package? Don't just look at the base salary. Dive into bonuses, stock options, commissions (capped or uncapped), and any other financial incentives to get the full picture. 2. How Often Are Raises Given? Understand the frequency and basis for salary reviews. Is it performance-based? Is it annual? I'd always try to know this upfront to project my future earning potential. 3. What's the Policy on Bonuses? Does the company offer annual or performance-based bonuses? Find out the criteria to qualify and when those get paid out. 4. Are There Any Stock Options or Equity Incentives? For those considering roles in startups or emerging companies, stock options or equity can be a game-changer. Understand the vesting period, potential $ value, and terms. 5. What Does the Benefits Package Look Like? Beyond salary, health insurance, dental, vision, retirement contributions, and other perks can significantly impact your financial well-being. 6. Is There a Relocation or Housing Allowance? More companies are returning to the office. Find out if there's support if you need to move, which can include shipping costs, housing allowances, or even trips for house-hunting. 7. Any Educational or Professional Development Benefits? Continuous learning can boost your career. Does the company invest in your growth through courses, workshops, or tuition reimbursements? 8. How Long is the Company's Cash Runway? Important for startups, understanding the company's financial runway (how long they can operate without additional capital) can give insights into the company's stability and future. 9. Is the Company Meeting Its Revenue Targets? Are they consistently meeting or exceeding revenue goals? This can be an indicator of job security (layoffs) and the company's long-term vision. — These questions are fair game to work through your recruiter to find out. If I receive an offer, I'll also use these as follow-up questions if it's not clear in the written offer. The more you know, the better positioned you'll be to negotiate and understand the full scope of what's being offered too. Don't leave money on the table (or get caught off guard down the road) by not asking the right questions. ♻ Share to help someone’s job search And follow me for more posts like this.