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Building a Compensation Model: How to Negotiate Your Big Tech Offer

amazon compensation apple compensation google compensation meta compensation microsoft compensation negotiating compensation Jun 19, 2024

When negotiating with big tech companies like Google, Amazon, Meta, Microsoft, and Apple, many candidates leave money on the table. And one of the main reasons is understanding all the components that make up one’s total compensation. In this blog post, I will break down the components and after reading you can use this link to create your own!

Understanding Compensation Models:

Compensation models at big tech companies encompass more than just salary. They include annual bonuses, equity, and sign-on bonuses that are designed to entice/motivate candidates to join their organization. And the good news is that top tech companies are known for their generous compensation packages, it plays a pivotal role in their ability to attract the best talent in the world!

Key Components of a Compensation Model:

Base Salary: When building your model, it is important to know that this is the least flexible item when negotiating with big tech companies. And while the base salaries at these companies are extremely competitive, sometimes candidates are disappointed with their base compensation. So it is important to remember that when building your model to stretch the band of what is listed in the job description (all these companies will have this info), and remember that when it comes to negotiation, this will be the toughest item to move. Typically, moving the base salary will not move more than 10K during negotiations. Obviously, as the level gets higher, there is more wiggle room.

Annual Bonuses: With the exception of Amazon, all the Big Tech companies have a strong annual bonus model, typically, starting at least 10% and oftentimes as you go up in level you can achieve an annual bonus amount of 25% or more. This does not include sales roles that will have performance based bonuses. The bonus percentage at these companies is not negotiable. It is important that you build it into your comp model as this money is essentially guaranteed.

Equity: All the big tech companies offer equity in the form of RSUs (Restricted Stock Units). All big tech companies pay out these equity grants over four years. Meta, Microsoft, and Apple pay 25% per year over four years. Google pays 38%, 32%, 20%, and 10% over four years, so they have heavily front loaded equity. Whereas Amazon pays 5%,15%, 40%, 40% over four years, heavily backloading the equity portion of their compensation. When building your comp model, go big on the equity portion, this will hands down be the item that you can negotiate the most! Build your model with the percentages by year, and model it out using a total amount of equity for four years.

Sign-On Bonuses: I always recommend asking for a sign on bonus, because, why not?!?! Now at Google, Meta, Microsoft, and Apple, this will almost always come in the form of a first year sign-on bonus. Most of these companies give sign-on bonuses, in the 100K or less amount. And obviously, the higher the level the bigger the potential sign-on you will want to build in your compensation model. In 99% of cases, Google will top out at 50K for L7 and below for example. Amazon is the outlier here, because they do not do an annual bonus and because their equity is heavily backloaded, they will provide a year 1 and year 2 sign-on bonus. These bonuses are big and one of the easiest items to negotiate with them. Make sure when you build your comp model for Amazon that you look at the four year average and the total compensation in any year is not significantly more than another year.

Refresher Equity: This will not be included in your initial compensation package, but it can be helpful to model this item out as well. What is refresher equity? It is additional equity to keep your compensation going up over time, and so your total compensation does not fall off of a cliff after year 4. So how exactly would you model this out? Refresher grants are 4 year grants that vest 25% per year over 4 years. So you can build this column into your spreadsheet to see what those refreshers would need to look like for your compensation to keep going up over time.

Conclusion

Building a robust compensation model is essential for making sure you are getting paid what you deserve during the negotiation process. By understanding all the financial components, you will build a better model and ultimately, get paid more. Good luck!!

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