[HN Gopher] Compensation as a Reflection of Values
___________________________________________________________________
Compensation as a Reflection of Values
Author : lwhsiao
Score : 64 points
Date : 2021-04-03 18:38 UTC (4 hours ago)
(HTM) web link (dtrace.org)
(TXT) w3m dump (dtrace.org)
| tus88 wrote:
| What about the cleaners?
| CyberRabbi wrote:
| I used to consider Cantrill's position on values to be authentic
| but after he supported Joyent's discontinuation of service to Gab
| solely based on their commitment to freedom of speech, I think
| his whole "values" shtick isn't much more than virtue signaling.
| I say this as someone who deeply disagrees with at least 50% of
| the people on Gab but nevertheless is committed to liberalism and
| human rights.
| chmod600 wrote:
| This feels more practical rather than ideological, which I intend
| as a compliment. Small team, get people focused, pay enough to
| not worry about personal financial stress, and let equity act as
| the primary reward system.
| specialist wrote:
| > _...pay enough to not worry about personal financial stress,
| and let equity act as the primary reward system._
|
| It's kinda weird that some become billionaires while others
| struggle.
|
| I support generous profit sharing. Equity, bonuses, dividends,
| and even compensation. Whatever works.
|
| How generous? Working towards a Gini coefficient in the 0.25 -
| 0.3 range is a good start. Enough head room for over achievers,
| without leaving anyone in the dust.
| ehershey wrote:
| There was good discussion when this came out.
|
| https://news.ycombinator.com/item?id=26348836
| marcinzm wrote:
| >we pay people based on their work
|
| No, companies pay based on the supply/demand economics of the
| particular job and the individual. The work done merely sets a
| maximum that the company is willing to pay and still get a profit
| out of the deal. How much you get offered below that is set by
| the market. The place you live impacts the market of jobs
| available to you.
| boulos wrote:
| I think the overall sentiment is right for an early stage
| company: you don't want any employees (including the founders!),
| worrying about covering their expenses.
|
| Personally, however, I would be more fluid than "constant
| dollars". Some people need more cash, and others need less. There
| are definitely people who would say "I basically don't want any
| cash, just get me health insurance and more lottery tickets"
| while others would say "Look, I would love to do this, but my
| family needs take home pay above this level".
|
| Letting employees trade off equity versus cash comp at _their_
| discretion via a formula seems fair to me. Anyone who reduces
| their salary is effectively reducing the amount of money needed
| for fundraising or time to needing funding (and vice versa, for
| more cash). For that reason, the trade off is also non-linear for
| the company: early dollars are worth a lot more than later
| dollars (though the price per share sort of reflects this). Said
| another way: if you had a $175k baseline salary, but let all
| employees also exchange $$s-for-shares at the current valuation
| up to some limit, you should probably do it! (Large company ESPPs
| are sort of this). Doing this exchange _ahead_ of time is just
| more tax efficient than "first we pay you cash, then you buy
| shares from the company".
| nbclark wrote:
| Agree with you on this. We do that at my company Divvy. Each
| prospective hire is given 3 different options (varying levels
| of cash / equity). The "implied" value of all three at the
| current valuation is the same, but as you mention some people
| prefer more equity upside and some prefer more cash in hand.
| RhysU wrote:
| But why not give everyone cash consistently and then allow
| them to buy equity as they desire, when they desire, by
| reinvesting in the business at the current prevailing rate?
|
| As even Homer Simpson figured out "Money can be exchanged for
| goods and services."
| lacker wrote:
| There typically is no "prevailing rate" for a startup. So
| just figuring out the tax implications is too much work to
| do it like this. Also, usually you're giving people options
| rather than equity; you can afford to give people larger
| option grants because of vesting than you could afford to
| sell them equity.
| lostinquebec wrote:
| Isn't there a tax implication? Tax is one reason part why
| people choose non-monetary remuneration. I'm not American,
| but my guess is in all jurisdictions that tax would vary
| based on the type of non-monetary remuneration.
| nbclark wrote:
| I guess it would depend how you structure the purchases.
| If you allow for the purchasing of a common share at the
| 409 valuation, you wouldn't have a tax hit until you sell
| it. You would be taxed on the salary used to purchase the
| share, however.
| lotsofpulp wrote:
| I'm not aware of any tax advantages of equity
| compensation in the US versus cash compensation. If
| anything, it could be a liability in the case that it's
| not actively traded, or if you trigger AMT and aren't
| able to sell the stock to pay the taxes.
|
| The type of compensation that comes with tax benefits is
| things such as subsidized health insurance, 401k
| retirement savings, commuter benefits, dependent care
| expenses, tuition, etc. That type of stuff is basically
| non taxed income.
| closeparen wrote:
| If you get lucky and your options both appreciate and
| become liquid, this windfall is taxed at long term
| capital gains rates.
| sokoloff wrote:
| That depends on the facts and circumstances. If they
| become liquid and valuable _before_ you exercise them,
| you're taxed as wages or short-term capital gains rates
| on those gains.
| sokoloff wrote:
| ISOs with an 83(b) election (and then "hit") are much
| more valuable than W-2 income from a tax perspective.
| (Whether that W-2 income is cash salary or RSUs.)
| lotsofpulp wrote:
| But that comes with the risk of over paying taxes, so not
| exactly comparable to cash compensation.
| nbclark wrote:
| Interesting thought. We're a private company, so the stock
| is still illiquid. That wouldn't prevent purchasing stock,
| but the question is where it would come from. Option pools
| are used for new employee grants so that could work, but
| when that runs out you need to typically create additional
| shares and dilute the other holders. Will put a little more
| thought into this.
| SkyPuncher wrote:
| Wow. That's an absolutely fantastic way to do this.
| boulos wrote:
| Awesome! Any lessons learned? (The main one I've seen and
| worried about is sophistication of employees with their
| equity. Options are confusing! But that's true whether it's a
| single offer or multiple perspectives).
| nbclark wrote:
| In general, it seems to be appreciated. We initially set it
| up this way to help take some of the stress out of
| negotiation (as that favors certain people over others). A
| few learnings off the top of my mind:
|
| 1. Regardless of the structure, the offer needs to be
| competitive. This wouldn't really help with lowballing
| offers.
|
| 2. Across the ~30 offers I've given out, I don't think that
| either of the 3 variants is more common. I suppose that
| indicates that different candidates are indeed optimizing
| for different situations.
|
| 3. Our hiring has intentionally skewed more senior and I
| think the variants of offers has helped create more family
| friendly offers.
|
| Regarding options, I tend to make sure to offer to spend a
| good bit of time laying out the details of how they work
| (strike price, preferred value, vesting, cliffs, early
| exercise, etc.). They are indeed confusing and I find that
| people typically either overvalue the value of the options
| today, or undervalue the potential upside.
| boulos wrote:
| How much do you space out the three variants? Have you
| gone beyond the endpoints? (But followed the same curve)
| nbclark wrote:
| Depends on the role/level, but ~10-15k annually between
| each tier. I have gone beyond the endpoints (within
| reason) by just linearly extrapolating, though that tends
| to be pretty uncommon.
| tmp538394722 wrote:
| Interesting. I wonder how this plays out in practice - what
| choices people tend to make.
|
| I wonder if there are politics for people who take more cash
| and less stock - does mgmt assume it implies less good will,
| since the employee is literally "less invested" in the
| outcome?
| nbclark wrote:
| Can only speak to my experience, but I am completely
| indifferent to their choice. Either of the 3 tend to be
| relatively substantial in equity, so everyone is invested
| in some regard. I also believe that in the long run,
| unvested options aren't the best retention strategy and
| that a challenging and rewarding work environment coupled
| with competitive compensation is the way to build an
| invested team.
| rectang wrote:
| > _equity versus cash comp_
|
| For me, the main tradeoff is not compensation, but time. I'm
| prepared to trade away compensation for fewer hours.
|
| But if I want to work a maximum of 32 hours instead of 40, then
| I essentially have to rule out most of the jobs I would
| otherwise apply for. It's not a criteria where most employers
| offer flexibility.
| h2odragon wrote:
| Sounds good; doubt that policy would fit everywhere but that is a
| _lovely_ expression of the notion.
|
| I wonder how many contractors and consultants this business will
| be using and how it can extend this attitude to their work? "Day
| rate salary"?
| dejj wrote:
| > Companies spin this by explaining they are merely paying people
| based on their cost of living, but this is absurd: do we increase
| someone's salary when their spouse loses their job or when their
| kid goes to college?
|
| Good to have this pointed out again!
| ardit33 wrote:
| You can live ok, and have disposable income with 120k in Kansas
| city, while in NYC or SF you probably have to have roommates,
| or live in a small cramped studio, to have the same disposable
| income at the end.
|
| If a company is going to pay for you to have a good/happy
| living conditions, and disposable income, then adjusting some
| of the pay by location makes sense.
|
| The best scenario is when they split the difference and it
| becomes a win win scenario.
|
| At the end of the day a company will pay as much as the market
| bears for their long term retention strategy (e.g. 94%
| voluntary retention).
| asdfasgasdgasdg wrote:
| You can live extremely well on 120k in Kansas City. Median
| household income there is only $54k. On 120k, you are very
| well off in KC.
| missedthecue wrote:
| A single person will have $6700 a month after taxes on 120k
| in NYC. Manhattan studio rent is about $1800. That leaves
| almost $5000 a month in disposal income after housing, which
| is higher than the US median income _before_ housing costs!
|
| Sure rent is pricy in Manhattan relative to other places in
| America, but I just don't get how that type of life is
| depicted as such a struggle online.
| draz wrote:
| $1800 is the very very low end for Manhattan (and likely a
| reflection of COVID price drops):
| https://streeteasy.com/studios-for-rent/manhattan
| missedthecue wrote:
| We can argue _exactly_ what one would pay for Manhattan
| rent but
|
| 1. $1800 isn't that far off for studio rent, multiple
| listings on apartment.com show that right now
|
| 2. Most New Yorkers don't live in Manhattan anyway. I
| purposely overstated New Yorker's rent costs to prove my
| point.
| jacques_chester wrote:
| Also: there's the Manhattan people typically think of,
| and then the reality that it's a large island with a wide
| variety of housing. Most folks who aren't from NYC think
| don't realise that world continues past 110th st (or,
| let's be honest, past 86th).
| draz wrote:
| Sure, but you're trading
| accessibility/entertainment/<something else people value
| and typically accept as a given for living in Manhattan>.
| At a certain point, it makes more sense to leave
| Manhattan to one of the other boroughs, go across the
| river to New Jersey, or move further up to Westchester/
| Long Island. Your money goes further there (housing,
| groceries).
| Grimm1 wrote:
| It's because it's not unless you're wildly outspending your
| limits. Having personally done it, living in Brooklyn was
| fine around 90k right in Carroll Gardens a pretty nice area
| with a 1 bedroom. Living in Manhattan was fine at about
| 120k and very easy when I was making about 150k. I have
| high student loan debt too. I haven't lived in a non luxury
| type building for years now at this point and only had a
| flat-mate once by choice while being able to save thousands
| a month. The narrative of the poor struggling highly paid
| engineer doesn't really jive with me.
|
| I moved to Jersey City last year to have cheaper rent but I
| did that because I don't care for NYC much and am migrating
| out in general but it wasn't like I was struggling as an
| individual engineer before hand.
| tzone wrote:
| Companies pay different amounts based on the location due to
| market price differences for software developers not because of
| differences in cost of living.
|
| If you relocate to Zurich or Vancouver from SF, highly likely
| most companies that re-adjust salaries will decrease your
| salary even though cost of living is pretty high in both of
| those places.
| rodonn wrote:
| I think one of the clearest examples of this is London, where
| tech salaries are 20-30% lower than SF despite it being
| roughly as expensive.
|
| My friends at Google say Zurich is a better deal that it
| might seem. Between lower taxes and moderately lower cost of
| living, your google salary goes a lot further in Zurich than
| it does in Mountain View.
| 908B64B197 wrote:
| It's one thing to whine about compensation but if engineers
| in Zurich or Vancouver want things to change they must vote
| with their feet and come to the Bay Area.
|
| Either that or get VC funding on par with what's happening in
| the valley.
| jen20 wrote:
| From Vancouver this is a fairly straightforward proposition
| (or as I understand it, was one pre-COVID). From Europe, it
| is _incredibly_ difficult to get a work visa for US. The
| most egregious example of the difference here is London vs
| San Francisco.
|
| The cost of living is not crazily different, yet the entry
| level comp in SF is high senior level for most technical
| jobs. However, my experience is that the Bay Area has a lot
| of British immigrants (I encounter a new (to me) at least
| weekly at the large company I work at), so perhaps people
| are indeed voting that way.
| 908B64B197 wrote:
| > From Europe, it is _incredibly_ difficult to get a work
| visa for US.
|
| Maybe it's time to negotiate a better deal.
|
| H1 is completely clogged with not so legal bodyshops, but
| what about simply getting an O-1?
| djoldman wrote:
| Paying someone more than a company can get away with is PR spin
| or a mistake from the shareholder perspective.
| fizx wrote:
| As a side effect, I imagine that this will lead to a very high
| hiring bar.
|
| Without the ability & incentive to hire someone "junior," every
| interviewer will compare the new hire to their inflated view of
| themselves.
| pm90 wrote:
| I guess it depends on the person. The author mentions this
| isn't a strategy applicable outside the realm of startups.
| Having worked in that environment, you're often looking to hire
| whoever competent you can find to help with the immense backlog
| you would naturally have.
___________________________________________________________________
(page generated 2021-04-03 23:01 UTC)