Compensation Philosophies: Your Help Needed
Hey! This is Andre, with a request for those in the FAANG FIRE community.
I want to peel the curtain back on the trends we are seeing over the past year around Tech Compensation and Tech Compensation Philosophies.
I need your help to do the topic justice.
I am looking for more examples of Tech Compensation Philosophies and specific details on how your total compensation has been changing over time. I am particularly interested in those working at public companies where equity compensation is a major component. I could pull this anonymously from Levels.fyi but was interested specifically in those reading this newsletter.
In exchange for helping out I’ll help your create your own Total Compensation Dashboard along with a new version I am working on that will show how your Total Compensation is changing over time.
One of the outputs will be a refreshed look at Tech Salary Changes like I did in July of last year when digging into “Tech Salary Crashes”.
If you are willing to help you can reply to this email or send a separate email to andre@avocadofire.com.
In addition to changes in Total Compensation I am wanting to write up a more detailed look at Tech Compensation Philosophies. I would really appreciate any other examples and input on what you all have seen. The collective wisdom of you all will be a greater force than I could compile alone.
Understanding your companies "Compensation Philosophy" is just as important as understanding your current Total Compensation. The philosophy is what will dictate all your future equity grants, raises, and adjustments to your Total Comp.
Here is a draft of what I have so far that I would love to get more feedback on.
Which philosophy does your company fall under, or am I missing some completely. Comment or reply to this newsletter with your company name and philosophy.
Flavors of Compensation Philosophies:
Target Total Comp: Companies with a "Target TC" philosophy will make changes to annual equity refresher amounts based on the performance of the equity your currently have. So if your Uber Stock increases a lot, your refresher in the following year will be lower. They typically have target bands they try to keep you in year to year.
Level, Role, Performance Focused: Companies with this philosophy have a very formulaic approach to annual refreshers. They do not factor in the current equity you hold at all. Nearly everyone at the same role, level, and rating will receive the same annual equity refresher. This can lead to very different Total Comp numbers based on when you first joined the company since initial stock grants are typically significantly larger.
Retention Heavy: Companies with a retention heavy philosophy use their annual equity refreshers as a lever for retention more so than the others. Typically you will see vesting schedules that are heavily weighted towards payouts 3 or more years after the grant. Some as extreme as annual 3 year grants with full 3 year cliffs.
One and Done: Companies with this philosophy will offer large initial equity grants but tend to be much stingier about future refreshers. The 4 year cliff is the most extreme for employees at these companies where future annual refreshers will never make up for the drop of their new hire grant.
Choose Your Own Adventure: Want all cash? All equity? Options Only? Just move the dial depending on how much of a guarantee you desire. This will typically be combined with one of the previously mentioned philosophies but the main difference is the ability to shift all risk in favor of pure cash compensation.
I would really appreciate your help! If you’re willing to contribute in any way please reply to this email or send a separate email to andre@avocadofire.com.
-Andr
i'm curious what are the typical companies in each of the 5 Philosophies buckets. looks like meta and google is #2, amazon is #4, and netflix is #5?