The compensation world has changed for the better for those in IT over the last 10 years. Titles like CIO, CTO, CISO, CDO, and other titles related to Big Data, Cloud and Cyber Security were not mainstream even five years ago. It is a good time to be in technology in corporate America. The best talent is sought after in a highly competitive landscape, and technologists are earning an increasingly high income potential. That being said, little is written on the topic because those outside of technology often don’t realize how much the game has changed.
There is a lot that goes into negotiating top pay for tech’s top performers, and things like culture, relationships, fulfillment and work-life balance need to be considered.
As a financial advisor for more than 20 years, my partners and I have met with countless executives in tech. We have studied compensation trends, and one common theme in executive and tech compensation is that you don’t always get what you deserve, but most of the time you do get what you negotiate. When negotiating your salary, it’s important to know the basic components of a competitive package for top technology talent:
• BASE SALARY: This is the most obvious portion of compensation, but for the higher income earners, this is typically less than half of their total compensation.
• BONUS: Most bonus targets range from 20-100 percent of base salary depending on level in the company. Typically, the higher the level, the higher the range of variable compensation.
• LONG TERM INCENTIVE PLAN (LTIP): At public companies, LTIP comes in the form of stock options, RSUs or PSUs. At private companies, it may come as phantom stock or a deferred bonus. Either way, this is typically the largest component for top tech talent compensation. This may range from 30-100 percent of the salary, but with considerable upside if the stock is growing.
• BENEFITS: This can often be overlooked, but 401(k) matching, profit sharing, pensions, health insurance, supplemental benefits, PTO and other benefits can often add up and should be considered when sizing up the value of a package.
Consider these 5 tips for negotiating:
1. If the company you are negotiating with is a public company, research their proxy statement online for helpful insights, including executive compensation plans and details on their compensation philosophy. This will allow you to be informed ahead of negotiating.
2. Ask for a signing bonus. Most firms don’t benchmark signing bonus compensation the way they do base salaries and bonuses, and often are more negotiable with upfront money. Top executives could ask for as much as 50 percent of first year salary in a signing bonus.
3. Ask for a relocation package if moving is required — this could save you $10,000-$20,000.
4. If you are leaving unvested equity on the table at another company, ask the new company to buy it out with a new equity grant or LTIP. This can be important to filling gaps in your financial plan if you are leaving money behind.
5. Always keep relationships, networks, and LinkedIn vibrant. Often your best benchmarking research involves friends and former co-workers who are in similar roles. They can be a great resource in helping you stay informed about current compensation trends.
We hope this brief article has helped you with what may be an important conversation about your career and future. As always, if we can assist you in anyway in the process of living well either personally, professional or financially, please check out our website at livewellcapital.com.
Joseph B. Beshear uses LiveWell Capital as a marketing name for doing business as representative of Northwestern Mutual. LiveWell Capital is not a registered investment adviser, broker-dealer, insurance agency or federal savings bank. Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) and its subsidiaries. Joseph B. Beshear is an agent of NM and Wealth Management Advisor of Northwestern Mutual Wealth Management Company. CA license 0G98957.