How to constructively convey my attitude regarding salary/equity tradeoff to potential employer?

Question

I am considering working at a company that is not yet public. Let's assume that it is expected that there will be an "exit" within 2-4 years. I have been asked to provide them some details about what my expectations are w.r.t. compensation. The way this request was phrased suggests that they are looking for a single number: what salary I expect/desire. My attitude is that I would prefer compensation be biased heavily towards options/private equity versus pure salary. Is there some constructive way I can convey this in my next communication?

My naive idea at how to put this is something like:

I estimate that the value that I can provide is worth at least X salary and an option to take a stake in the company. Given my current financial outlook I am more motivated by the prospect of owning a piece of the company's success than I am by the immediate gratification of a paycheck. I hope that this information helps in the formulation of an offer.

I am struggling to word this in a way which does not sound crass but also conveys my thoughts clearly. My goal is to not push for the highest possible salary if they are willing to compensate me with options as a tradeoff.

Thanks for any answers or though provoking counter-questions you can provide.

Answer 1

I have the opposite preference to you (I far prefer salary to stock-based comp), but the phrasing I use to convey that will likely work just fine for you:

"My expected salary range is $X - $Y, depending on total compensation including stock options."

That typically opens the door to a more casual conversation about the makeup of your comp package. E.g.,

You: "My expected salary range is $70k - $90k, depending on total compensation including stock options."

Them: "Options, huh? How interested are you in stock options? We have a generous RSU package."

You: "I'm all for stock options - I like them over base salary, actually."

Them: "Great! Our package looks like [blah blah]."

In other words, you don't have to go into lots of detail about why you prefer stock options over salary - you just have to be clear that you consider them part of your total compensation.

When you use this strategy, I recommend providing a wider salary band than your actual expected total comp. The high end is what it would take for you to consider the job without any stock (presumably very high), while the low end is as low as you're willing to go with a good stock package.

Recruiters and hiring managers are likely to start with that lower number, at which point you can say, "Like I said, my range depends on total comp including stock. What kind of stock package would you offer alongside that salary?" Then see what they offer, and negotiate from there.

Answer 2

"I'm looking for a stock position of about 2% once they mature, and $xyz,000 salary, and medical."

How else could you say it?

I am struggling to word this in a way which does not sound crass

Honestly set the "crass" idea aside.

When you go in to McDonalds to buy a burger, the person says "That will be 98 cents, thanks." It's the same. Just state your price.

If you don't simply state what you want, it will be very confusing.

I estimate that the value that I can provide is worth at least X salary and an option to take a stake in the company. Given my current financial outlook I am more motivated by the prospect of owning a piece of the company's success than I am by the immediate gratification of a paycheck. I hope that this information helps in the formulation of an offer.

I would utterly set aside this language.

You don't have to explain "why" you want a salary, "why" you want shares of some form, or "why" you want medical.

(For that matter, the company doesn't have to explain "why" they want you to write software, while, you are there each day!!!)

It's super-ultra confusing if you start explaining "why" you want shares, salary or medical.

Please understand that, regarding the founders, every single conversation they have all day is about nothing other than people (on the investor side or the employee side) stating percentages.

Do be aware that when you talk about positions, the "actual numbers" can be confusing and meaningless. For example, if you get "three thousand" or something, that could ultimately be (even if everything works out) 0.01% of the whole company, or, it could be 10.00% of the whole company. To make a simple example if X says to you "we're going to give you 5,000 shares of this company!" there's a huge difference if the company overall has 50,000 shares or 2 million shares. And unfortunately there is a vast variety of ways you can be given share-like instruments, and the details can hugely change things.

You should google and read endless articles, https://getoutlaw.com/blog/equity-primer-for-startup-employees/ , https://www.startups.com/library/expert-advice/startup-equity-101 , https://www.secfi.com/blog/stock-options-101 etc.

Don't forget too that they may toss around valuations of the company. So they might say something like "We're gonna give you 1%. The company is valued at $2million, so that's 20 grand!" "Valuation" is completely meaningless until someone has actually paid money for some part of the company.

And finally don't forget that if you are given one of the many possible instruments, there can be (serious) tax consequences, whether immediately or later.