You’re right that only a few firms hire PhDs exclusively firmwide. However, there’re units/groups in many other firms that hire exclusively people with advanced degrees, not because of some type of credentialing, but because of the necessity.
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With an estimated cost of attendance at Cornell of $80k+, the ROI of those salaries do not impress.
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Average cost of attendance after aid is 37,000. The ROI would really vary depending on whether you are on a free ride or full pay…
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Year 1 salaries… just a single datapoint. In what world do you expect a huge ROI in year 1?
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I never said anything about a “huge” ROI.
If your kid has RSU or deferred comp, when they move to another company they should ask to be made whole. This is the general practice in banking, but not sure about other industries.
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You can always ask.
Companies usually have policies around this- and although they aren’t unbreakable, they are tough to negotiate. I’ve worked for companies where the ONLY people who were made whole were C-suite hires (Chief Financial Officer, Chief Marketing Officer, etc.) Lower than that? No. Occasionally a generous sign-on bonus (not the entire amount the employee was leaving on the table) as a “sign of good faith”.
The world understands that tech companies, start-ups, etc. use deferred comp as an inexpensive retention tool. (as in- costs nothing in terms of cash flow in the immediate future). So employees need to ALSO understand that a retention tool is just that- an award for staying put. You want to leave? You forfeit the retention advantage.
That’s why they are called “Golden handcuffs”. Yes- there is gold. But they can also handcuff you to a job you no longer want!!!
But you can always ask!
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My boss’s applied math, T10 undergrad was hired last year for $110k base plus 12k sign in and benefits like stock option etc. It was a non MBB consulting firm and offer was in a low COL area. He took that over MBB offer in a high COL at $100k with $15k singing and stock options.
Applies to other industries, like biotech, too, but might depend on the position and how competitive the applicant pool is. A principal scientist might get additional RSUs or options or $$$ to make the offer more competitive and compensate for lost value, but a junior research associate might be told “too bad so sad.” Never hurts to ask though.
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In typical tech-company RSU situations, don’t the RSUs usually vest in portions, over time?
So, if you get, say, $100K salary, and $200K is RSUs vesting over 4 years (~$50K/year), then that’s roughly $150K in comp. Assuming you time your exit/switch to shortly after a vest, then all you need to do is make sure you’re making >=$150K year at the new job.
i.e. On paper you may be leaving $150K in RSUs on the table, but then, you’re also leaving the salary, etc. you’d earn over the next 3 years on the table. Presumably, the annual average at the new company will be higher than the old anyways.
(Yes, there can be outlying situations, if, say, the old company’s stock has soared since the RSU grant date.)
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yes, yes and yes. The question comes up with the unvested shares- and for folks leaving a startup for a corporate situation. And sometimes that means a 10% increase in salary, which often means money on the table.
The old risk/reward scenario. You can be at a startup using AI to disrupt oil exploration or energy production, or using sophisticated algorithms to better predict the highs and lows of energy consumption-- which means cost savings for the energy company. And then you go to Exxon in a similar capacity. The risk of Exxon going out of business in the next year, or not having enough working capital to make payroll next quarter… is pretty close to zero. The risk at your startup might be substantial. It’s not likely Exxon is paying a HUGE premium for your skills- likely a modest premium over your current pay. So a candidate has to decide. Leave the unvested equity on the table, negotiate harder to be made whole?
Life is full of calculated risks!
I am told that you are supposed to take MBB for the better exit opportunities – than for the current pay.
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That’s pretty standard. Amazon has had a number of variations on it, but there it was the case (I don’t know anymore) that they used RSUs as supplement to salary because they had that weird rule of not paying anybody over $167k or something like that. I think they’ve moved off it. I can’t recall, but I think the vestings were more frequent than annually.
You also see cliff-vesting grants for signing bonuses as well, particularly in the senior ranks. Meaning, the award vests 100% on a date certain, usually two or three years out.
RSUs also come with performance vesting criteria (rather than just time vested), but that’s less common.
RSUs and deferred comp. are different things (though for tax purposes, LTIP grants have to comply with 409A).
RSUs are forfeitable; deferred comp. is comp. earned but payout is deferred pursuant to a prior election. Even if you get fired, your deferred comp. is paid out to you in accordance with that prior election.
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What’s the norm at a non-public startup?
Lets say you go to work for a promising VC-funded startup. They pay you, say, $120K in salary (you’re not a new grad), and $X in stock/option related comp. (Not sure what the typical structure might be). You work there 2 years and then would like to move on, but the startup hasn’t gone public/been bought out yet. But the startup is still promising - liquidity event in maybe 1-3 years.
Would typical sign-on option/equity/RSU structures allow you to keep/vest your equity/options?
I don’t understand the point you’re making here. Doing even a rough ROI based on first year pay seems considerably short-sighted.
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I haven’t practiced in that space in a while, but I’ll answer. You grouped a bunch of LTIP awards together that need to be parsed because they operate differently.
Performance equity - you leave before the performance period is up, then you lose it, but there are structures that involve vesting of the award along the way, and when the performance period is up and the company is measured against it, you still get the vested portion of the award based on performance even though you’re gone. I’d score these as rare.
Options - you leave and you lose the unvested portion but you keep the vested portion and have a shorted time-period (usually 30 days) within which to exercise. At public companies, if you retire at retirement age, you often get an extended exercise period (3 years) and sometimes more. But everything ends when the option expires (usually 10 year term), no matter what.
RSUs - you leave, and you lose RSUs. Note I don’t use the term “unvested RSUs” because there’s no such thing as a vested RSU. Vested RSUs are shares of stock - property under the IRC - with the same rights as any other shareholder. Those are yours to keep even if you leave.
In the PE space, there are variants to all of these things. Sometimes they make it very punitive on people if they leave. Say, putting additional restrictions on shares acquired from RSU vestings … but I don’t think that’s too common. Someone else operating in this space might know more about that.
For a non-public company, exercising options would require holding the shares since there is no public market to sell the shares into, but that can result in additional tax liability which cannot be covered by the proceeds of selling the shares that could be done with a public company.
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yep
To me, “MBB” is akin to a brand.
Consulting firms, just like colleges, are sometimes viewed in tiers. I mean, people on here talk about, “lesser,” Ivies. In the past, I have seen HYPSM grouped on CC as the top, “brand.”
In consulting, “MBB,” would be considered the top, “brand.” There are plenty of other consulting firms, as between MBB and those, there likely isn’t much difference in compensation. LEK comes to mind as ds had a friend who worked there. Friend might have started at slightly lower comp, but not appreciably.
Some people consider, “FAANG,” employment as the top tech brand.
Do MBB alums have better exit opportunities than those who work at less well-known consulting firms? Probably depends on how much weight the next employer values that brand.
Personally, I am a firm believer in the value of brand. One golden ticket often leads to another golden ticket. NOT saying one HAS to have ANY golden tickets to earn a desired salary or position or whatever one is seeking. But there are plenty who take a well-worn path of collecting a series of golden tickets.
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