Hello folks, I need some salary negotiation & financial advice.

Anonymous

February 24,2023 at 4:39PM UTC

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Hello folks, I need some salary negotiation & financial advice.

Here goes:

I'm evaluating an offer and have received the offer letter from the company. The offer letter contains details about the salary but it does not contain financial details about the stock options (other than how many stocks will be awarded to me, and the vesting period). What's missing is the price they are offering it at, and the market price - which was shared during the verbal offer, and based on which the overall compensation has been calculated. The offer does not contain the details of the post termination exercise window as well. Should I be asking for these to be added to the written offer? I read an article that stated that the strike price would be reevaluated at the next board meeting - does that happen? How do I know what my compensation is like, if the strike price will change?

I've also been offered a joining bonus, but this has a clawback clause. The company states that the bonus will be paid out in two instalments - and I will have the right to the money after 1 year (failing which I'd have to pay them back). How do I negotiate this - can I reject it, or ask for more base instead? Is this common at companies? My friend mentions it's a trap - and you might have to cough up the money if it's a bad work environment and you want to leave.

Thanks!

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AnonymousFebruary 24,2023 at 5:09PM UTC
The clawback you describe is pretty standard.
You can try and negotiate any part if the offer and request any additional detail be added to your offer. The company can entertain your request or rescind the offer. Offers are dances.
AnonymousFebruary 24,2023 at 6:01PM UTC
Ask the recruiter or HR contact about receiving the stock options in writing.We've had issues with staff who received a substantial sign on bonus upon hire and left after 2 mos. We are changing the policy to receive bonus later and in installments. HR less than thrilled they have to reach the ex-employees for repayment because in CA it is not legal to dock a final paycheck in lieu of bonus. You could certainly ask for higher base rate in lieu of the sign on bonus.
AnonymousFebruary 24,2023 at 6:10PM UTC
Thanks. Do you mean I tell them I can take the money in base and no bonus?
AnonymousFebruary 24,2023 at 6:41PM UTC
Clawbacks with sign-on bonuses, relo bonuses, etc. are quite common. Everything is certainly negotiable; however, I would be a bit concerned if a candidate balks at a sign-on bonus because of clawback. To me that says, "I'm not fully committed to this company and will be looking for the first opportunity to jump ship."
AnonymousFebruary 24,2023 at 8:40PM UTC
Yes and no. I will act in good faith, if they do too. There are no exceptions for an RIF, and it’s poor practice to lay someone off and ask them to pay back the bonus. Nothing is guaranteed, employment wise and they don’t state their responsibilities in this.
I am hesitant to sign an generic clawback - I would be a lot more reassured if they stated what the conditions for termination would be (if it happens).
AnonymousFebruary 24,2023 at 7:53PM UTC
I worked at a company that offered me a bonus, paid out in four installments, with the expectation that you work another 6 months after each installment. I took the first one and reject the second because I knew that I'd be moving and would have to pay it back.
Plus, I kinda' saw it as an insult. They had a toxic work environment, so they were essentially bribing people to stay by offering bonuses. They needed to create better working conditions that fostered employee loyalty!
The worst part. When I got hired, they said my bonus was "special" and not to discuss it with anyone. I found out they offer bonuses to ALL new hires... and many were staying simply because they accepted the bonus.
Stock options, on the other hand, show a company's commitment to their future... and once rewarded, the stock is yours to keep. And the value of the stock could increase while it sits in your account.
AnonymousFebruary 25,2023 at 1:51PM UTC
Real Stock options as investments in their employees yrs - My “newly merged” company is offering stock options but- the kicker is the company is private with no solid IPO date. How can this be? It’s an offering of nothing at this point in time - my “previous” company (which was public) merged with this new giant company (which is private) .. the environment is totally toxic and a ridiculous time frame of 1 year to obtain this retention ”bonus stock option”. How is this even legal? They’re even valuing these non existing stocks at $5 share - ?? Lawyer time?
AnonymousFebruary 26,2023 at 1:37AM UTC
I’d want the written offer to cite and attach the organization’s policy on stock options and the strike price.
I’m not crazy about the clawback provision. You certainly can counter with a request for a higher base and the elimination of the clawback clause, or an earlier payout.
A contracts lawyer or employment lawyer might be useful in helping you negotiate the final offer.
AnonymousFebruary 26,2023 at 1:46PM UTC
I think with stock options that vest on a certain date they can't guarantee you a set price. For instance my husband gets 3 rounds of vestment and the stock price is the first day it vested and then sale. price is when you sell it. On taxes btw it is good if you sell it for a loss otherwise you are adding it as income to your taxes the following year.
AnonymousFebruary 26,2023 at 2:20PM UTC
If you have the number of shares and vesting period, all you need is the strike price. The current price isn't as important as the price history since you most likely won't vest for at least a year. This information should be readily available on the company's website if this is a publicly-traded company. You can also google the stock price for --company-- and there is a wealth of information online. The signing bonus will likely provide an extra cushion until the options vest, which is why there is a clawback. While all of this extra is a great incentive to sign on now, what happens down the line when the stocks are fully vested? Are there also provisions for performance-based bonuses and raises that will compensate in the future? If the signing bonuses are too big on the front end, you end up taking a cut in pay your second year. I would concentrate and focus on tangible compensation and ensure that it is what you can live with for the next three to four years. Those sign-on perks diminish in value and glamour as time goes by.
Eloisa JacintoFebruary 26,2023 at 8:35PM UTC
Hi, please ask for a copy of the plan documents to give you an idea of how the plan is designed eg what is the basis of strike price, termination clauses etc. Options are quite tricky since your gain is dependent on whether the stock will perform against your strike price so it will be good to understand the company and its performance over a period of years and its potential earnings down the road. On signing bonus this is usually given to payoff some potential losses eg waiting time for vesting or bonuses that you may likely forfeit when you join a company thus clawbacks are necessary. Suggest to check the conditions for the clawback as well eg thus pro-rating applies, conditions when clawbacks are not applicable, etc. good luck!