- There is a selection bias. Nope, this is pretty much accurate.
- These aren't real. Yes, yes they are.
- Self-reporters are lying. Maybe some do but these numbers are pretty accurate. If anything, I question Lyft and Airbnb as such outliers. I wonder if this factored in Lyft's post-IPO stock performance and makes unrealistic valuations of Airbnb's RSUs/options. But for any listed company, these numbers are accurate.
- You have to work incredibly hard for this compensation. no, you don't. In fact you'll typically find significantly better work-life balance at a FAANG than a startup.
- These numbers are inflated by years of stock growth that is unlikely to continue in the future. This there is some truth to but not as much as people claim. Amazon, of all these companies, builds in expected stock growth into their initial grant valuation (which I think is total BS; if any Amazon recruiters are reading this, please stop). But I know what offers new hires can get pretty accurately so at current stock prices as a new hire these numbers pare pretty accurate.
- Newer offers are likely to be less. False. If anything, initial offers continue just climbing such that anyone who is interested in maximizing their compensation should probably move companies every 3-4 years, especially 4 if you don't get an additional grant after your initial grant has fully vested.
There are some things to be aware of though and these can make it nontrivial to compare competing offers. Some examples:
- Most FAANGs have a 25/25/25/25 vesting schedule. Amazon does not. It's vesting schedule is 5/15/40/40 with a vesting signing bonus in the first 2 years to (partially) compensate for this.
- Amazon, as noted earlier, assumes stock price growth in their offer.
- Amazon (noticing a trend?) has vesting on 401k matches that can take 2-3 years. Most FAANGs do not.
- Anything less than a 50% 401k match is below market.
- Some FAANGs have caps on 401k matches. Some don't.
- I think the most generous 401k match I've seen is Google's at 50% of your contribution with no cap or vesting period or 100% of the first $3,000 at year's end, whichever is higher. The really nice thing is because there's no cap you get it immediately. It's fairly common to get your bonus in January, put it all in your 401k, get your 50% match and you're done for the year.
- Some offer the ability to make contributions into after tax 401k (Google "mega backdoor Roth" if you're interested in this). This is potentially huge beneficial. You can use it to invest money you can withdraw at any time at no penalty but the investment returns are tax free. If you withdraw the returns (not the initial investment) prior to being aged 59.5 you pay taxes plus a 10% penalty, however.
- Vacation days vary but 4 weeks (20 days) should be considered the norm for the US (30 for Europe/Australia).
- Some companies (eg Google) start you on less vacation days but you get more with length of service.
- Unlimited time off is bullshit. Think of this as no time off.
- Health insurance can differ but I imagine pretty much all FAANGs at this point have good health insurance. The gold standard is probably Kaiser for CA residents.
- Some FAANGs have a 1 year cliff. Some do not (eg Google, FB).
- Vesting schedules can vary. Some are monthly, some every 3 months, some annually. Try to avoid anything less frequent than once every 3 months. It can create bad incentives for the company to get rid of you before a big vest date.
- FAANGs will give you performance-based RSU grants annually. The time of year can vary. The eligibility can vary. For example, Google gives you a refresh grant at, after Q2-Q3 calibration (based on your previous two halves). And I believe in recent years it changed that if you joined that calendar year you aren't eligible.
- Because of refresh grants and your initial grant running in tandem, years 2-4 can often be your most lucrative. If you don't get promoted or an additional grant you can get significantly less compensation in year 5. Why these companies let people leave because they won't give them additional equity rather than competing for a new hire is beyond me. But they do.
- Because of the inflation in initial offers, a new hire can often have a significantly better offer than someone who joined 3 years prior. The veteran may only have higher total compensation because of refresh grants and/or stock growth.
- FAANGs tightly control salary within bands for a given level. Going beyond this is unlikely to happen however there is FAR more movement on RSUs in an initial offer and/or signing bonus.
So this is all another reason of why from a financial POV working for a startup is--how should I put this?--suboptimal. Your equity is probably worth nothing (even if you get acquihired, liquidation preferences probably mean all non-founder stock is worth $0). The hours are worse. The benefits are worse. There may be reasons to do this that aren't financial (as a non-founder) but personally I'd suggest people use their most productive years to ensure their financial independence and then chase whatever moonshot tickles your fancy without the pressure of having to pay for food.
I worked about 5 years in startups and small companies beforehand, and I probably work about the same as in a startup (long hours, partially because I'm a workaholic/ambitious), but with far better quality of life due to management being more competent and working with me to manage stress.
Some comments on specific bullets:
> - Vesting schedules can vary. Some are monthly, some every 3 months, some annually. Try to avoid anything less frequent than once every 3 months. It can create bad incentives for the company to get rid of you before a big vest date.
I have not seen Apple trying to play that game at all (their vesting schedule is every 6 months) - my understanding is if the company wants to get rid of someone, they give them zero refresh RSUs come annual review time as a strong hint.
> - Vacation days vary but 4 weeks (20 days) should be considered the norm for the US (30 for Europe/Australia).
Apple is a bit abnormal in that they give you 12 days to start, but the company typically has ~18 company holidays. Creative folks could negotiate with their manager to make those more flexible with comp time after showing competence.
> - Unlimited time off is bullshit. Think of this as no time off.
I agree for most companies, but Netflix I think is an exception here - my Netflix friends all enjoy copious time off and still get sizable annual raises, one even being offered a promotion to manager.
Unlimited PTO is always in the company's favor because even if you try asking for more time off than you might have been granted your manager can simply claim that now isn't a good time, or say too many people have asked for the same days off, or point out that others haven't taken as much time off so they should get more time off before you do and because it doesn't risk you not using limited time off they can feel like it's not a problem and it leaves you with no way to prove a loss.
There's no forced PTO, though good managers will encourage you to take it. That's relatively common from what I gather.
I've never had any friction around taking time off, if I was responsible about clearing/delaying/delegating projects and getting my day-to-day work covered.
It's easy to fall in the psychological trap of thinking you never can, sure, but since Netflix pretty much starts at the Senior level for hires (biggest reason they aren't in the first two sections probably) I think it's less of an issue. The fact you see your coworkers taking time off without the world blowing up is also a powerful social cue.
I'd never trust a startup with unlimited PTO, but Netflix actually does mean it.
I'm so tired of hearing this. I think there are some professions/job levels where that is true (client facing jobs or higher up managers), but for most non-management development jobs, this just isn't the case. I've worked at three different companies that have had unlimited time off (I seek it out now) and I have plenty of friends who have worked at companies that have unlimited time off as well.
I've had a few friends work at companies where "unlimited time off" = "no time off", but those are the exception not the rule, in my experience (and usually down to a bad manager somewhere in the chain of command).
I've been at my new company 6 months and have already taken 4 1/2 weeks off. I had a friend take 6 weeks off to backpack through Europe. Two companies ago I took off the entire month of September one year. I'm convinced people who say "Unlimited time off is bullshit" are just bad communicators.
If are at a company that has unlimited time off and actually want to use it beyond just a few days a year, here's my tips:
- Get your work done. Above all else, when you are in office, get your shit done. You want your manager to trust you and be able to justify your job if someone higher up goes "why are we paying someone who isn't even here".
- Be aware of your teams workload. Don't try and take a month off two weeks before you're about to ship a mission critical piece of feature.
- Communicate with your manager/PM/team early and often. If you want to take a month off, let everyone know a few months in advance. Planning is usually done quarterly. Letting your boss know you are going to be gone for a month allows them to only schedule two months of work for you instead of three. Additionally, remind them occasionally that you are going to be gone (I usually bring it up every other one on one)
- Before you go, make sure your work is wrapped up or handed off to someone else. Don't start a task and then disappear for a month.
- If possible, leave a "how and when I'm reachable". You don't need to always be working or even online, but seeming available (even if you're not needed) does a lot to calm nerves. Things like leaving a phone number where you can be reached incase of emergency, listing dates where you will be 100% unreachable, and checking email or slack occasionally for high priority things (I tend to do this while I'm sitting in the airport) make things so much easier for managers.
I know a lot of this seems like common sense, but so people get it wrong and then complain when they get reprimanded because they didn't do it.
If you provide value when you're at work and make sure you leaving causes as few disruptions as possible, taking large portions of "unlimited vacation" is totally possible.
I love your post but I almost shat myself when I read this. Kaiser is convenient but not top ranked in much. The gold standard is a PPO that lets you go anywhere (else) you like incl. top specialists + a membership primary care network like OneMedical for convenience.
(By the way, I support Medicare4All. Good healthcare shouldn’t just be for wealthy FAANG engineers and even for us the system still sucks.)
I think the only reason people consider it a gold standard is because they market it really well (especially in the bay).
I've been on various Anthem PPOs of varying quality (Google's covered basically everything with zero copay or deductible, their individual plan wouldn't even cover my PCP, my wife's plan was in the middle but getting progressively worse). There's a convenience/flexibility tradeoff. With Kaiser you know that they'll take care of you but you don't have a lot of flexibility or recourse if your particular needs don't meet what they offer. With a PPO you have a lot of flexibility to choose the best providers available, but you have to fight with the health insurance company for a lot of things, and the administrative hassles can be a huge burden.
The only advantage Kaiser has over many health care providers is price.
It's a slipper slope if you think your anecdotal satisfaction with your medical provider is a metric of how well the system takes care of you. Unless you are looking at outcomes at a population level it's really hard to see what's going on.
I will say (as others have noted) that Kaiser's mental health support is terrible, but there outcomes outside of that are very strong (if not best in class). They were frequently studied in my partner's master of public health, because of their strong outcomes.
Also don't underestimate the power of primary care in the heaths system (patient's tend to skip primary care visits in PPOs). Many of the life threatening issues my partner sees were caught only due to a primary care visit which exactly why systems like Kaiser are effective.
When you need a brain surgery or cancer treatment, you’re definitely going to “feel better” having “choice and freedom” to go to the best.
Here's an actual comparison of health care plans:
And here's some research showing Kaiser's outcomes quality:
> It’s certainly true that primary care visits improve health outcomes, but you offer no evidence that people get more primary care at Kaiser.
Again, I worked with claims data where we could analyze primary care utilization and kaiser was significantly higher than most PPOs in our systems (and high in general). We specifically built an email targeting patients who did not visit their primary care doctor in the last year and Kaiser was at the bottom of numbers because of the high usage. There is definitely a lot more research you can find studying Kaiser's integrated approach and how it related to primary care usage. Kaiser is pretty good good at preventative care, primary care usage, and some chronic care management.
> When you need a brain surgery or cancer treatment, you’re definitely going to “feel better” having “choice and freedom” to go to the best.
Again, I've outlined research showing outcomes and quality metrics showing Kaiser is pretty solid. Their primary care usage is higher than other health plans, and there are quality metrics and research showing they are pretty good at preventative, primary care, and chronic care management. There are definitely gaps, but from a population level outcomes, they perform at or better than many PPOs given their costs. If you take a step further and look at the economic ROI of their plans, they definitely outclass most PPO and HMOs.
It's not like they have that much secret sauce, the main advantages they have are the same ones a nationalized system has (being integrated aligns incentives better).
You moved the goalpost from “healthcare outcomes for tech workers” to “economic ROI given their costs”. This is what I mean by poor reasoning.
Sure, Kaiser is a good bargain. Lowering costs means more people get care vs don’t get care. It is not the “gold standard” when premiums and deductibles are not an object, like a tech workers company sponsored plan.
> OP and myself were discussing Kaiser as a health care plan. The ranking you showed was about hospitals not health care plans;
This is a bizarre retort as Kaiser generally locks you into their hospitals. Clearly we’re arguing different things.
Anyway, I agree with you. Kaiser is convenient, but the standard of care of HMO-nominal (i.e. poor).
I've used PPOs with PAMF for lots of years now, and it's been far better than Kaiser no matter who my actual insurance provider was.
Job offers have never been anything but a straight salary and a 401k, sometimes with matching, sometimes not. No bonuses or stock ever. Raises have usually been just below inflation rates. Vacation peaked for me at 3 weeks.
For context, I'm a senior software engineer with twelve years of experience. I make $130k right now.
If you're in a reasonable COL area, you're probably closer to FAANG salaries than you think.
I make about that in a relatively low COL city in the south. After receiving some recruitment emails, I thought about FAANGs but ran the numbers and decided against it.
$400000 is not nearly as awesome as it sounds if you're living in the Bay area or similar tech mecca. Note: it's an immense salary, of course, but not so far from 130000 when you consider COL. Whether 100000 or 400000, we're all very fortunate.
Finally, from what I've heard, it's far from guaranteed for a non FAANG senior engineer to get offered a senior engineer position coming in. More common is to start at engineer, which would be a straight up demotion in salary when you consider cost of living.
FAANG engineers are welcome to correct me if this is not the case at their company.
Edit: surprised this is getting heavily downvoted. I'm not claiming they're equivalent, only closer than you'd think. Also, I wonder if folks even look at COL comparisons, which don't even tell the whole story. For example:
And I live in an even lower cost-of-living city than Raleigh. I also think this site gives an optimistic view of San Francisco COL, based on what I've heard from friends. Particularly if you want to buy a home.
If you're just coming out of school, and can get a job at a FAANG, go for it. But for older devs with established families and spouses with careers, the salary isn't as overwhelmingly more as it appears at first glance.
In the absence of arguments otherwise, I'll assume the truth hurts.
- 129k taxes
- 72k housing (~1.2M dollar house)
= ~200k left over
Just off that alone, the 400k blows the $130k out of the water, no matter where in the country the $130k is living.
Just curious, as I currently walk to work and that's a massive QOL issue for me. Sitting in traffic even 60 minutes/day would be awful.
If you highly value walking to work (and to other amenities) then NYC is a great option. $1.2M won't buy you a place, but you can certainly rent a great apartment within walking distance of the Google or Facebook NYC offices for significantly less than $72k/year.
Interestingly, the suburban office campuses in this area are beginning to go away. Companies are moving to locations that are at least Metro accessible (Google's new office), or into urban areas (Amazon HQ2). Local zoning has changed to make that more palatable - just interesting to see the change in preferences since I started work in 1999.
And to be honest, my ability to walk was dumb luck. If I change jobs, I’m just as likely to have to drive/Metro into Tyson’s as walk locally. But walking is a big incentive to stay put.
That was one fear with HQ2 coming to DC. With it on the other side of Fairfax, it’ll be a while before it impacts housing out here. But if Google expands its footprint, and with the Metro opening soon, we might see another bump soon.
It's an apartment condo. Worse yet, the land itself is leased from a different owner.
Start with the idea that you own the land and the building, and that you can walk around the building while staying on land that you own. Ideally you would also have mineral rights, the right to drill a well, and similar. You should have the right to bulldoze the building, paint it any color, add brick facing, add gargoyles, or install a triangular front door.
The point is, buying a place for $1.2M in walking distance isn't crazy.
You don't need to be at the company headquarters to make $500k a year. Not being at the headquarters is only a problem if you want to get past director level ($1.5 M/yr)
Either way, rent is around $5k a month here for a three bedroom, which is quite doable on a Google salary.
$1.3m will get you a 1300 sq foot town house, so yes, it's quite possible to be located near fang HQ on the budget described above with a family.
Source: Zillow around whisman station
If you really want a house comparable to what's affordable on 130k out there, you're talking at least double that.
Still more money, but your number are off by about 25%
Did this once and won my bet, but was very aware of how bad it might go. (Well, "won", since my ex got it all...)
Then you can use NerdWallet for cost-of-living excluding taxes (SF is 211% of NC). So after you've replicated your $90k take-home in SFO, you have about $48k surplus to invest. Not bad, but also probably not what you were expecting!
CoL calculators online are not accurate at all.
I personally work remotely for a FAANG from the upper Midwest, but if this arrangement ever runs out I’d move to California or Seattle before I took a 30% pay cut.
Which FAANGs hire remotely, please?
And why do you think online COL calculators are inaccurate? They're relatively close to government reimbursement tables, which are pretty well-researched.
Edit: Also, once again, I'm not arguing that I wouldn't come out ahead, only that you have to consider COL. So many new grads I know have moved to CA for a junior position, elated at making the same salary I make here as a senior, only to realize that cost of living eats up a huge percentage of that salary. Granted, some of these people may not be the most financially frugal around...
My main argument is that COL is an important component of salary.
If you are saving 100k/year in a place that is very expensive, and are happy to live in a place with low COL, work for 10 years in the high earning/high cost of living area and retire in the low COL area.
3 * income - 3 * cost = 3 * ( cost + savings ) - 3 * cost =
Is my assumption wrong? Otherwise it's 3x and not 5x.
Also don’t forget that wealthy people can save most of their money, so an X% increase in overall expenses doesn’t need to translate to an X% increase in income.
I think the same applies to Microsoft (Azure) and Google (GCP)
One secret is that management in most companies, even FAANG, often will let you work remotely from time to time as long as you get your work done - I have often worked while traveling in order to cut down on vacation day usage without complaint.
Otherwise, I have seen Netflix offer remote positions on occasion, but know that such positions are extraordinarily competitive. You will not get such a position by being just an above average dev.
Numbers on paper don't tell the whole story.
but the reality is that hard numbers, especially when they are 300% more, really do matter
I travel enough. I go to plenty of good restaurants with my wife and friends. I can buy some fun toys. My retirement fund is in progress. I have no debt.
Would I turn down another hundred grand a year? No. Would I do much with it? No, it'd just go to investments, which I may or may not live long enough to use.
You do you, though.
I forgot to mention the tax and liability advantages of a fully funded trust and autonomous private foundation.
To begin with, the cost of basically anything you buy online from Amazon, Walmart, Apple, Best Buy, etc is the same no matter where you are in the country. Likewise for digital goods. That's a point in favor of the high COL areas.
Of course it's not that simple. You're right that there are plenty of things which cost more money in higher cost of living areas; namely entertainment, cinema, service-oriented experiences like restaurants, bespoke labor, groceries and housing.
In most of those cases the absolute cost raises significantly but the relative cost to your increased salary is still tiny; for example, I spend $6 - $8 for a half gallon of milk, but since I earn well over $300k/year that doesn't really matter. Similarly movie tickets are ~$18 but again, that doesn't scale enough to make much of a dent relative to a competitive engineering salary here.
On the other hand, some cost increases are significant even relative to competitive salaries. This mostly and primarily applies to housing, but it does also apply to restaurants and entertainment somewhat. But despite the fact that I spend over $4000/month for a luxury condo and another ~$2500/month on fun "stuff", I'm also saving over $100k/year on top of maxing out my 401k. That simply blows out any combination of lifestyle and savings I could enjoy in a meaningfully cheaper area.
Finally there is (unfortunately) an opportunity cost to working outside of high COL areas. The concentration of wealth and capital in high COL cities has a superlinear feedback effect on opportunity and lifestyle. There are numerous Michelin rated restaurants near me, a concierge and retinue of helpful staff in my building, world famous entertainment venues within a 20 minute train ride, numerous gyms, lots of childcare, excellent schools, etc. My commute to work is also only 20 minutes.
But those things don't interest everyone. More practically, it is also easier to quickly change jobs here, either out of necessity or for a quick 20 - 50% increase in compensation. Not only is the higher COL a justification for higher salary, but the employee power that comes with a bidding war puts a positive pressure on external compensation packages. The last time I went looking, I received about 10 offers. I don't even currently work at one of the most competitive companies according to levels.fyi.
I don't want to push this on other people because money isn't everything and it's perfectly valid to choose a lower COL area. But I do want to lay out the hard numbers from my experience so as to give a better picture for the situation.
It's also true that it's much easier to change jobs there. That's IMHO the biggest asset and what I used to argue for moving (wife won out).
The culture stuff isn't as interesting. Sadly, wife and I are just homebodies. When we were first married, we lived within a short subway ride of Manhattan yet rarely made it down there. We tend to enjoy cooking, reading, hobbies, etc. Kids are the same. Also, there are multiple other extenuating circumstances that make a move not possible at present.
I do agree with you about the opportunity cost of working outside high COL areas, and I agree that it's not a good thing. It's increasing the country's polarization, which bodes poorly for everyone. But you're right that it's the current reality.
What about my assertion about senior software engineers usually getting shuffled into engineer positions. Do you think that's true, or no?
Being a high achieving senior engineer is about delivering on communication and prioritization, more than anything else. It’s very hard to evaluate a prospective hire’s day-to-day willingness to communicate and prioritize, no matter how impressive their resume.
If you do well, you’ll quickly get promoted, though.
And the salary difference is pretty negligible, relative to RSUs, and people who think of themselves as senior can often get pretty senior RSU packages, so this distinction isn’t super relevant for total compensation.
Yeah, so that's a major factor here to consider, right? We're talking about moving to a FAANG from a non-FAANG in another region. If most non-FAANG people lose a level, then it really does make the salaries less when you consider cost-of-living.
What the downleveling does is align expectations correctly, since most people not at a top tier company likely need some time to ramp up to the expectations of the next level up. What senior/staff/principal mean at companies like Google/FB/Apple is very different from what it means at most companies.
I am much closer to the floor (new grad) than I am to the ceiling, as far as FAANG salaries are concerned.
I work in the auto industry, which doesn't pay nearly as well, and I'll grant that you're all talking savings rates above my before-tax salary, so you win on that point. However, my hobbies include a machine shop in my basement and a woodshop in the backyard. I estimate the expense of moving to the Bay at north of $150k due to having a non-50-state truck that I would need to replace to be able to move a machine if I ever wanted to upgrade or replace, etc, along with the need for ~2x the typical space that people want in definitely not a condo or apartment. Is that even possible, nevermind practical, in Mountain View?
On the other hand, new venues open up due to the larger amounts of cash on hand. More expensive travel or dining, for example.
It's amazing to me how little people read comments. They latch onto one idea, and then respond to that.
I mentioned - 3 times! - in my original comment that they were not equivalent, but only much closer than they appeared at first glance because of COL. In light of all the responses above, many of which were enlightening to me, I stand by that assertion.
This has been my experience over a 20+ year career of working mostly at startups. If you choose to work for a startup, assume the equity will be worthless. Don't even factor it in to your compensation package. It's a false lure.
In many other ways, though, I don't regret working for startups. They're fun and exciting, at least when you don't have a family, and you can learn a lot in a short amount of time. They're good proving grounds for anyone with an entrepreneurial bent, in my opinion.
Yeah Amazon is really deceptive with their offers and raises. Assume you won't get anything more than what's on the offer letter, even if you get promoted. And don't expect much reward for high performance, if you want a proper raise you'll need to job hop instead. Even if you do get a reward, expect it to be heavily deferred and reduced based on a ridiculous 15% stock growth assumption. Amazon uses a 6 month vesting schedule to try and ensure they have ample time to kick you out before a vest (or they get to get away with not giving you the comp if you get angry and leave before a vest). Here is a review of how Amazon comp works:
Many large companies operate on an up or out basis. If you're not getting promoted then you're encouraged/expected to leave at some point. This compensation scheme seems like a soft version of that.
Years 1-4 you're being paid both for what you do as well as for your potential. If you haven't been promoted by year 5 then you're just getting paid for what you do.
Any promise of eventually being the smarter move due to ownership or profit share is not worth it. Only 1 in 10 startups is likely to exist at the 10 year mark, and the majority of those still won't be well funded or be issuing dividends. Working for a startup is roughly similar to playing the lottery, somebody is going to win and it won't be you.
To your point FAANG companies used to be the worst career option because managerial expectations were impossible, but that ended almost a decade ago. If anything, FAANG companies will likely be among the first to even implement a 30 hour 4 day work week in the next 10 years for the same salary as the 40 hour 5 day work week. It's getting batter to work for an established company, and most of the bad managers that insisted on making the working environment terrible are now running the startups.
After years of research the clearest conclusion about who you should work for should always be answered by who has the best management team. Good managers enable work life balance, compensate above average and rarely dictate how to get things done. They should be more interested in making you valuable than whether you plan to stick around, and all of this is supported by real research into successful management techniques (See books like Good to Great, Team of Teams and The Goal for supporting reference materials).
And just to be clear, I currently work at Netflix.
The idea of unlimited is that it's not 14 days or 21days. Take as many as you honestly reasonable need to. Everyone's life is different, you might get sick, have a sick family member, have a new child. There might be things that come up that requires you to take time off without you having to grovel to your manager. If you also need to take time off for the good times, a wedding, a party, to go see a world cup, Olympic, whatever, do so. So long as you're contributing, not holding your team and peers back and your impact is constant.
p/s. I don't work for Netflix, but that's what I imagine anytime I hear "unlimited".
For what it's worth, the company I just started at is "flexible", but the average is around 25 days per year.
- Initial offer sets your comp for your first 4 years.
- If stock outperforms the expectations (as it has historically done) you get no refreshers.
- If your comp is at the top of your band, you get no/nominal raise.
- Newly promoted engineers get paid the bottom of the new band. If they are already earn that much or more (via stock growth) they get nothing.
And then the truly key points.
- The company stack ranks employees every year. Only top performers (a tiny fraction) get raises to the top of their band. If they are already at the top or above (via stock growth) they get nothing.
- Most other employees get no/nominal raises.
- Employees must be 'consistently performing at the next level' in order to get promoted. This avoids the Peter principle .
Why do I say this discourage retaining talent? Let's consider the following scenario:
- You are a good engineer, and get hired for your level at top of your band.
- Because you are at the top of the band, no matter how hard you work, you won't get any raises. Being rated top performer, which is quite difficult, gets you nothing (other than an ego boost).
- You need to consistently perform at the next level to get a promotion. This might take a few cycles in the best case scenario. If you are doing well, essentially you are doing L+1 work for L salary.
- When you finally get promoted, you go to the bottom of the band. Including stock appreciation, you will still probably not get a raise.
- You need to be a top performer at the next level to get a raise.
Also once your initial grant runs out, you rely on stock appreciation and top performer ratings to get more money.
This model incentives behaviours like these:
- Get hired at the top of the band. Use competing offers between top companies to get there.
- Work just hard enough to not get fired in your first 4 years.
- After your initial grant expires, interview somewhere else.
Or, if you have a very good shot at a promotion.
- Get hired at level L.
- Do good work to get promoted to L+1 within your first 4 years.
- Shortly after the promotion, look for L+1 positions in other companies. Chances are that a new hire offer elsewhere will be much higher than your current comp.
Anecdotally a good number of people leave after a promo, and this is probably one of the reasons why.
EDIT: Fixed formatting.
Refresh grants for mediocre performance are mostly a Google/Facebook thing.
Federal contributing limits at 19.5, no?
I actually think this is a terrible system as it punishes most the people who need it (ie lower level employees) but here we are.
For completeness, there is also vesting, which I mentioned. This means you get the match but if you leave within a certain period (eg 2 years) they will claim back your match.
401K limits are separated into 2 limits, the second being a bit more obscure.
There is the employee limit of ~19,500 which is reviewed by the IRS every year, and there is the employer limit which is an additional number where the total of both is reviewed by IRS every year. It is currently ~$56,000 or so
Many employers only barely flirt with this number, offering a few thousands here and there in various schemes.
Any software engineer doing a little contracting can pump $30,000 into their own self directed 401k acting as their own employer. You can have multiple 401ks as long as the total limit doesn't exceed that super max.
For most people here, the mega backdoor Roth is probably more doable, assuming your employer offers the option.
?? I joined Google in 2014 and had a 1 year cliff. Have they removed it now?
A lot of companies had seen their stock more than double, so a 500K grant turns into over a million (typically vested over 4 years). This is before any bonuses and perf grants