Ask HN: Salary negotiation?
Co-founder of a SaaS startup that is currently being acquired. How should I negotiate my future salary as an employee? Any tips or best practices?
34 comments
First start with what you want, because there are multiple variables at play in an acquisition:
- Cash Comp - What you are actually paid every 2/4 weeks.
- Sign On Bonus / Retention Bonus - Paid lump sum (or over time) for joining the acquirer.
- Benefits - 401K / HSA / Health / Medical / Dental, individual or dependents.
- Equity - Assuming your equity will be bought out (cash) or rolled into new equity or both.
- Equity Vesting Schedule (AKA Golden Handcuffs) - On what terms does it vest? What are the strike prices for options?
- Non-Compete - May be part of the acquisition for a period of time.
- Termination - Golden parachute or termination without cause and you lose your equity?
Next, figure out what they can give you on each of these compensation areas. This is the negotiation part.
- Maybe they are in a cash crunch and they can give you really generous stock grants?
- Maybe they are out of options in the pool and need to refresh it, so they'd rather give you cash.
Objective of negotiating is finding a solution that works for both parties. You will have a much better time if you focus on what works for them, and toy around with your preferences.
Every negotiation that starts with "Take them for all they are worth" sets the wrong tone.
- Cash Comp - What you are actually paid every 2/4 weeks.
- Sign On Bonus / Retention Bonus - Paid lump sum (or over time) for joining the acquirer.
- Benefits - 401K / HSA / Health / Medical / Dental, individual or dependents.
- Equity - Assuming your equity will be bought out (cash) or rolled into new equity or both.
- Equity Vesting Schedule (AKA Golden Handcuffs) - On what terms does it vest? What are the strike prices for options?
- Non-Compete - May be part of the acquisition for a period of time.
- Termination - Golden parachute or termination without cause and you lose your equity?
Next, figure out what they can give you on each of these compensation areas. This is the negotiation part.
- Maybe they are in a cash crunch and they can give you really generous stock grants?
- Maybe they are out of options in the pool and need to refresh it, so they'd rather give you cash.
Objective of negotiating is finding a solution that works for both parties. You will have a much better time if you focus on what works for them, and toy around with your preferences.
Every negotiation that starts with "Take them for all they are worth" sets the wrong tone.
Some very good point! Thanks a lot. We already covered a lot of these points but some need to be addressed. I hope we will discuss the base salary with decision makers and not only HR who is not that much involved in the whole acquisition process.
I have no experience of your situation but I think you should perhaps start by negotiating your level and title as an employee as part of the acquisition. I suppose that what's achievable is correlated to the size of your startup.
Whether you join as, say, Director or VP will have a direct consequential impact on your salary (you'll automatically fall within different compensation bands) but also on your standing within the company.
Whether you join as, say, Director or VP will have a direct consequential impact on your salary (you'll automatically fall within different compensation bands) but also on your standing within the company.
Thanks for the advice! Very helpful. Do you have any general tips for negotiating a salary?
Negotiating the title and then researching salary bands for that title probably will give you more insight into what to expect, once you have a better understanding of their bands, asking a number in top 10% of the particular band should be doable. If the number doesnt impress you, ask for a higher title.
If it is a large company they have pay bands that limit their flexibility. I would start by negotiating level and research those pay bands. Might be easier to negotiate a one time payment or something that a deviation from their pay structure.
It is indeed a big company. Definitely a good point, but they should have a little scope. I should start with the pay bands and find some good arguments why I want to move up in the payroll.
This.
And gather some intel while you can. Get a sense of where you might land in terms of position, pay bands, etc.
Then argue for level first (it tends to be less contentious than money) and if they agree, you've locked in a pay band.
And gather some intel while you can. Get a sense of where you might land in terms of position, pay bands, etc.
Then argue for level first (it tends to be less contentious than money) and if they agree, you've locked in a pay band.
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This post helped me (and many others here, I'm sure) learn about salary negotiation: https://www.kalzumeus.com/2012/01/23/salary-negotiation/
Appreciate it! Thanks.
Ask for double what you want, to start.
I don't want to be cheeky with them, but at the same time I expect something more than industry standard. The problem is that I have never worked as an employee before and salary negotiations are new territory for me.
Do you still have equity after the acquisition?
No equity of our company but I will get some RSU's and since they are a public company they are limited how much they can hand out and the majority will be in cash and some of it combined with a earn-out.
You'll have a good chance of getting "we can't pay that, sorry, see you" back. Then if you actually want that job you'll have to walk it back and negotiate down. Not always possible, so it may not be the greatest idea to start at x2.
If they don't counteroffer then they don't want you. This is a negotiation. The starting offer is about anchoring. Neither side should expect the starting offer to be accepted immediately. If it is accepted then one side didn't anchor properly and lost the negotiation. Start with a number you think is too high but still leaves room for the company to negotiate down to an acceptable number for you. I usually don't go for double my target but others might. I usually start out at 150% of my target.
Yeah, I should've expanded the comment more. 150% is more reasonable. A crazy high initial request is not a request, it's just "I want you to say your price first". It almost doesn't matter if you say 200% or "50 bazillion, your turn now". It's not that they don't want you, the hiring people may just assume you're not serious and not counteroffer at all - then it's up to you to come back and update your own offer.
So why not skip that step and start more reasonable?
So why not skip that step and start more reasonable?
> I usually don't go for double my target but others might. I usually start out at 150% of my target.
150% is far more reasonable than 200%. Let's say you won't take below 100k, Co. won't take above 120k, you offer 150k. From the Co.'s perspective, that's 25% difference, it's worth negotiating. If you offer 200k, that's 66% off what you'll take. Co.'s probably thinking, okay, this guy will take 160 maybe 140 but no way they'll really think they can negotiate down to 120.
At bigger companies there aren't incentives to spend tons of time negotiating a candidate down to the top of your acceptable range, so even if they think they can get you down 80k you're out.
You don't counteroffer a candidate you can't afford. And I think you understand intuitively 200% is too much, which is why you go 150%.
150% is far more reasonable than 200%. Let's say you won't take below 100k, Co. won't take above 120k, you offer 150k. From the Co.'s perspective, that's 25% difference, it's worth negotiating. If you offer 200k, that's 66% off what you'll take. Co.'s probably thinking, okay, this guy will take 160 maybe 140 but no way they'll really think they can negotiate down to 120.
At bigger companies there aren't incentives to spend tons of time negotiating a candidate down to the top of your acceptable range, so even if they think they can get you down 80k you're out.
You don't counteroffer a candidate you can't afford. And I think you understand intuitively 200% is too much, which is why you go 150%.
If they want you, they want you.
If they balk, then you know where you stand and that information is probably valuable.
If they balk, then you know where you stand and that information is probably valuable.
It's definitely acqui-hire, too. That makes sense! Thanks for the perspective. I'm just wondering what arguments to bring to these types of conversations.
This reminded me of a 30 Rock episode in which Jack Donaghy applies insights from negotiating with his nanny to negotiations with the cable company acquiring NBC.[1] Basically, if you're vital for the acquisition to succeed, you have (some) leverage.
[1]: https://www.youtube.com/watch?v=a7-eoiY4bOo
[1]: https://www.youtube.com/watch?v=a7-eoiY4bOo
The only argument that matters is I-have-other-options.
A negotiation is not an argument. It is an agreement.
Either you reach one or you don’t.
And if you agree to something that you don’t want to live with, you’re already halfway out the door.
A negotiation is not an argument. It is an agreement.
Either you reach one or you don’t.
And if you agree to something that you don’t want to live with, you’re already halfway out the door.
Or they could counteroffer.
Lets say you want $250k. Ask for $500k. They might be relieved, because they thought you would want $800k.
Lets say you want $250k. Ask for $500k. They might be relieved, because they thought you would want $800k.
So you would say to set an anchor as high as possible?
What is your 2nd best option?
If your 2nd best option is a job making 200k.. and you ask for 800k and they just say no? Well, being cocky just lost you 200k (you could have asked for 400k).
If your 2nd best option is a job making 200k.. and you ask for 800k and they just say no? Well, being cocky just lost you 200k (you could have asked for 400k).
True that
Negotiations boil down to "are you actually willing to walk away if you don't get X". Power goes to the most willing to walk.
don't bluff if your hand is complete crap
But leaving would mean that the entire deal would fall through, which is no longer an option.
That sounds like they have quite a lot of leverage because the acquiring company cannot let the deal fall through... Or they don't have any because they already agreed to stay.
Base salary is in general less negotiable than stocks.