Rich or Poor, Offer Letters Are Still Necessary
If you’ve worked at any level in the corporate world, you’ve probably received an offer letter of employment. As a teenager, your first job offer – babysitting, mowing lawns, washing dishes, waiting tables – was probably pretty informal. Ah, but that first official offer letter.
Sure, things might have gone great on your interview. You’re 99% sure they’re going to give you the job. Hopefully you negotiated a nice salary increase. You can’t wait to tell your parents and friends. And HR even verbally said you got the position. But it wasn’t fully, totally official until you had the written offer letter in hand. And it was glorious.
Not to burst your bubble, but was it as glorious as the offer letter that Ruth Porat, the new CFO of Google received?
Sure, the numbers are staggering for the average worker: $70 million in total. But let’s look at a few of the takeaways.
1. Millionaires: They're Just Like Us
It’s fun to think about ways that an offer like this could be extended to a high-ranking executive. Is it a handshake deal on the Google Corporate Jet? What about a notebook bound in Corinthian leather, pulled from a stainless steel briefcase? Not quite.
Takeaway: Just like your offer letter, it’s just a standard template with the company logo, beginning with “I am pleased to offer you the position…” and ending with “Let us know if you have any questions” from Human Resources (in this case, the SVP of People Operations).
2. All About That Base? Nope.
While certainly impressive, Porat’s base salary is “only” $650,000 in this multi-million dollar package. Two things to note:
- This is actually a 35% pay cut vs. her current Morgan Stanley base salary of $1 million
- This is the identical salary that the previous CFO received – no increase there
Takeaway: I’ve seen it time and time again, where job-seekers focus only on the base salary, and not the big picture. Whether it’s the type of work, the bonuses, or the commute, sometimes you have to accept a certain level of base pay – and even consider a pay cut – to get what you want.
3. Pay for Performance
The lion’s share of the compensation -- $65,000,000 – is given in stock grants. The NY Times notes that in transitioning from cash bonuses to stock incentives, Google “presumably made the change to align senior officers’ paychecks with the interest of its increasingly impatient shareholders.”
Takeaway: Isn’t that the way we should want it? Sure, there are always market factors outside your control, and you should be compensated for the expertise that you bring, but if you’re a confident leader taking an executive position at the highest levels, you should want to compete and be rewarded for your performance. And note that the stock vests over several years… she’s got to stay the course in order to reap the rewards.
4. Some Things Are Negotiable, Some Aren't
Aside from the base pay and stock options, there are two other line items that couldn’t be more in contrast. The first is a $5,000,000 signing bonus, which equates to about $2,500 per hour over the first year. The second is the $7,500 moving allowance.
Takeaway: When negotiating your own job offer, it’s important to know where the hiring manager has flexibility, and where they don’t. For example, paying $1,100/month for medical benefits might seem insane, and even double or triple what you were paying at your last job, but it’s futile to try and negotiate that rate if it’s a company-wide policy tied into the bureaucracy of our healthcare system.
In Porat’s case, the $7,500 moving allowance was probably the same rate that a software engineer moving their family from Staten Island to Silicon Valley would receive. The flexibility was in the bonus, so find out where that budget is at your company.
5. Rock Stars Call Their Own Shots
As Fortune wonders, is Silicon Valley the new Wall Street? With the electricity of New York City, the dynamic markets of finance, and massive pay packages, Wall Street has always attracted top performers looking to make their mark. But with increased regulations and a black eye from the recession and banking crisis, many of those would-be rock stars – as well as future graduates – are setting their sights on technology, not trading.
Takeaway: Industries will always fluctuate over time. What’s hot today will be old news tomorrow. However, if you’re among the best of the best and can put together a significant track record of success, you’ll put yourself in the position to take advantage of the highest pay working at world-class companies – no matter what industry you want to move into.
Whether $70 Million or $30,000, Negotiation Is Key
The overall point is this. While Porat’s offer letter is eye-popping to the average worker making $55,000 per year, you can learn from these takeaways to put yourself in the best position to succeed at your own career, which can be glorious in it’s own right.
The first thing you should do is research, so you're able to come to the table armed with the knowledge of what your job is worth. Use our free Salary Wizard below to find out what's a fair salary for your position. You can enter your location, education level, years of experience and more to find out an appropriate salary range before you negotiate.