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Compensation

Salary

General Resources

Link Notes
Gergely Orosz The Trimodal Nature of Software Engineering Salaries in the Netherlands and Europe
  • Software engineering compensation market become "trimodal": split into three distinct groups that "spike" and that have little overlaps
  • Most engineers are not aware of this third, "Big Tech" pillar and the compensation ranges it introduces, assuming compensation can not go beyond what is offered at the second pillar
Questions you can ask about compensation

Ask for a salary increase

  • "I was hoping we could talk about my salary. I've taken on a number of new responsibilities over the last year, such as [fill in the blank, and I'd like to discuss increasing my salary to a level that reflects that."
  • "I think I'm given a lot of responsibility here - which I really appreciate - and I've accomplished almost every goal that we've laid out for me to do. I'm curious about whether I'm performing at the level of someone higher up on the career ladder. Can we explore whether I'm being compensated at the appropriate level?"
  • "I love the work I do here and want to stay with the company long-term. That said, my understanding of the market is that I should be making X."

Negotiation

If Asked About Current Compensation

Question Answer
What's your current salary?
  • I'm not really comfortable sharing that information. I would prefer to focus on the value I can add to this company and not what I'm paid at my current job
What's your expected salary?
  • I want this move to be a big step forward for me in terms of both responsibility and compensation
  • I don't have any particular numbers in mind. I'm more interested in learning whether this will be a good mutual fit. If it is, I'm open to exploring any offer so long as it's competitive.
    • I really have no particular numbers in my head, it all depends on the fit and the composition of the offer. Once we decide we want to work together, I think that's the best time to figure out a compensation package that makes sense
    • Well, okay. I know that the average software engineer in Silicon Valley makes roughly 120K a year salary. So I think that's a good place to start
What's your current and expected salary? I'm not comfortable sharing my current salary. I would prefer to focus on the value I can add to this company rather than what I'm paid at my current job. I don't have a specific number in mind for a desired salary, and you know better than I do what value my skillset and experience could bring to your company. I want this move to be a big step forward for me in terms of both responsibility and compensation. I look forward to hearing what you think is appropriate.
I just need to be sure the salary range works for your requirements so we don't waste each other's time It sounds like you're trying to qualify me for a salary range. If you want to tell me what that range is, I'm happy to tell you if it's in the ballpark.
If they insist I'm not comfortable sharing my current employer's proprietary compensation information, and I know they wouldn't appreciate it if I did. I still work for them, and I'm just not comfortable sharing their proprietary information about how they pay people like me. I really don't have a specific number in mind for an expected salary, and I look forward to hearing what you suggest.

Offer Stage

When receiving the offer

  • Yeah, [COMPANY_NAME] sounds great! I really thought this was a good fit, and I'm glad that you guys agree. Right now I'm talking with a few other companies so I can't speak to the specific details of the offer until I'm done with the process and get closer to making a decision. But I'm sure we'll be able to find a package that we're both happy with, because I really would love to be a part of the team
  • I'll look over some of these details and discuss it with my [FAMILY/CLOSE_FRIENDS/SIGNIFICANT_OTHER]. I'll reach out to you if I have any questions. Thanks so much for sharing the good news with me, and I'll be in touch!
  • Hello [PERSON], I just wanted to update you on my own process. I've just received an offer from [COMPANY] which is quite strong. That said, I'm really excited about [YOUR AMAZING COMPANY] and really want to see if we can make it work. Since my timeline is now compressed, is there anything you can do to expedite the process?

Ask more

  • I'm really excited about the problems you guys are working on at [COMPANY]
  • I've received another offer from [OTHER CORP] that's very compelling on salary, but I really love the mission of [YOUR COMPANY] and think that it would overall be a better fit for me.
  • I appreciate the work you guys put into constructing this offer. But there were a couple things I was unsatisfied with.
  • The offer you guys extended was strong. Right now my decision is basically between you and [XYZ CORP]. It's a genuinely difficult decision for me, but there are a couple of dimensions where, if this offer improved, it would be much more compelling.
  • I really want to buy a house within the next year; what can we do to improve the salary?

Stock Options

General Resources

Link Notes
Gergely Orosz Equity 101 for Software Engineers at Big Tech and Startups The most common equity compensation setups you might come across, help you understand their value, and point to additional resources
Julia Evans Things you should know about stock options before negotiating an offer Some useful questions to ask when evaluating an offer
Don’t Get Trampled: The Puzzle For "Unicorn" Employees Other questions to ask when evaluating an offer from an early stage startup
Understanding Startup Stock Options
  • A stock option is a contract that gives you the right, but not obligation, to buy a stock at an agreed-upon price and date
  • So if your employer grants you 100 options, you do not own 100 shares. Rather, you have the option to buy 100 shares at the aforementioned strike price. Doing so is called exercising your option.
  • The hope is the value of the shares will go up and you'll be able to sell them for more than you paid
What does exercising stock options mean?
  • Exercising stock options means purchasing shares of the issuer's common stock at the set price defined in your option grant
  • Early exercise is the right to exercise your stock options before they vest
  • A variety of ways you can exercise your options:
    • Pay cash (exercise and hold)
    • Cashless (exercise and sell to cover)
    • Cashless (exercise and sell)
The Holloway Guide To Equity Compensation Stock options, RSUs, job offers, and taxes—a detailed reference, including hundreds of resources, explained from the ground up, for both employees and managers
How Startup Options (and Ownership) Works How the economics behind startup options and ownership works (cap table, dilution, liquidation preferences, etc.)

Negotiation

Percentage ownership

  • What percentage of the company do the shares represent?
  • What set of shares was used to compute that percentage? Is it outstanding shares or fully diluted?
  • What convertible securities are outstanding (convertible notes, SAFEs, or warrants), and how much dilution can I expect from their conversion?

Valuation

  • What did the last round value the company at? (That is, what is the preferred share price times the total outstanding shares?)
  • What is the most recent 409A valuation? When was it done, and will it be done again soon?
  • What exit valuation will need to be achieved before common stock has positive value (that is, what are the liquidation overhangs)?

Stock options

  • Do you allow early exercise of my options?
  • Am I required to exercise my options within 90 days after I leave or am terminated? Does the company extend the exercise window of the options of employees that depart?

Vesting

  • Are all employees on the same vesting schedule?
  • Is there any acceleration of my vesting if the company is acquired?
  • Do you have a policy regarding follow-on stock grants?
  • Does the company have any repurchase right to vested shares?

Startups

  • How much money has the company raised (including in how many rounds, and when)?
  • What did the last round value the company at?
  • What is the aggregate liquidation preference on top of the preferred stock?
    • This will tell you how much the company needs to sell for before the common stock—your equity—is worth something in an exit.
  • Will the company likely raise more capital soon?
  • How long will the company’s current funding last?
    • This will likely be given at the current burn rate, or how quickly a company is spending its funding, so will likely not include calculations for things like future employee salaries.
  • What is the hiring plan? (How many people over what time frame?)
  • What is the revenue now, if any? What are the revenue goals/projections?
  • Where do you see this company in 1 year and 5 years, in terms of revenue, number of employees, and market position?
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