Key Considerations For Tech Professionals When Negotiating Comp

In the aftermath of the tech boom in the Puget Sound region and the increasing need for more talent at these large tech companies, it has become quite lucrative for tech professionals to entertain new roles at competing companies. Here at Fortis, we’ve recently assisted a number of clients switching employers to negotiate new compensation packages, and we wanted to share some of the key considerations that we think are important to focus on with you:

Cash Flow– At the end of the day, your monthly expenses are going to be paid for by your monthly cash inflows. This means that it’s incredibly important to ensure you have a solid understanding of what this is going to look like in your own personal finances. Companies such as Amazon that have back weighted vesting schedules (i.e. 5% first year, 15% second year, 40% third year, 40% fourth year) means that you will not see the value of these stock grants until a few years down the road. Are you receiving enough cash compensation in the meantime to meet your monthly needs? This can be where you negotiate a larger cash signing bonus to fund the gap.

Stock Prices Can Go Down– When providing offer letters, we have seen some companies give incredibly optimistic “promises” of what the stock price will be in the future and, therefore, what the total comp package looks like. Given that we are 11 years into an economic recovery, it’s important to run some scenarios and consider what your comp would look like if the stock price DOESN’T go up 15% per year. What if it went down 30%, or just stayed flat? Is that sufficient for your family? The average large cap stock swings 30% in any given year, so it’s important to consider scenarios where the stock doesn’t go up.

Salary vs. Bonus vs. Stock Comp Limits– Certain companies have different limits in terms of how much they can give you for specific types of comp. For example, Amazon won’t give salaries above $160K, even for the top brass. However, cash signing bonuses can be significantly higher and stock comp even higher than that. So if you are meeting strong resistance on one type of comp, try negotiating for more of another form. If you have plenty of cash flow, you may be able to give up a cash signing bonus for significantly more stock over the next four years, but be wary of what we mentioned above… the stock can go down!

If you are thinking about switching jobs within the tech industry here in the Northwest, we would be happy to chat through your options when it comes to negotiating your new tech compensation package.