Скачать или смотреть Breaking Down Six-Figure Tech Salaries! Types of Compensation Explained!

A comprehensive overview of how top tech companies compensate their employees, offering valuable insights into the various components of compensation packages and strategies for maximizing earnings. This information applies to all tech giants including Meta, Google, Apple, Netflix, Microsoft, and Amazon.

Types of Tech Compensation

Timecodes
0:00 - Intro
0:38 - Salary
1:14 - Restricted Stock Units (RSUs)
2:39 - Employ Stock Purchase Plans (ESPPs)
5:16 - Employ Stock Options (ESO)
6:50 - 401k
7:52 - Bonus
8:53 - Tech Compensation
9:12 - Parting Words

1. **Base Salary**: While not always the largest component, the base salary is crucial because it influences other forms of compensation like raises, cash bonuses, ESPP contributions, and 401(k) matches. Employees are encouraged to negotiate the highest possible base salary upon joining a company, as future increases tend to be smaller for those who stay with the same employer compared to those who switch jobs. This practice is supported by data showing that employees who stay longer than two years with the same employer often earn 50% less over their careers.

2. **Restricted Stock Units (RSUs)**: RSUs are a common form of compensation in tech. These are shares of a company's stock that vest over time, typically following a four-year schedule with equal distributions each year. Some companies, like Amazon, use a back-loaded vesting schedule to incentivize longer tenure. RSUs' value depends on the company's stock price, which can fluctuate, so employees might gain or lose depending on market performance. The video advises selling vested RSUs rather than holding onto them to avoid potential losses from stock volatility.

3. **Employ Stock Purchase Plans (ESPPs)**: Less common than RSUs, ESPPs allow employees to purchase company stock at a discounted price. Employees can contribute a portion of their salary, usually 10-20%, to buy shares at the end of an offering period. The shares are purchased at a discount from the lower price between the start and end of the offering period, providing a guaranteed return if sold immediately. ESPPs are capped by the IRS at $25,000 per year for tax-qualified plans, and employees are advised to maximize their contributions for a high guaranteed return.

4. **Stock Options**: Typically offered by startups or rapidly growing companies, stock options give employees the right to purchase stock at a set price (the strike price) after a vesting period. The value of stock options depends on the increase in the company's stock price. Stock options have been responsible for significant wealth creation, such as the case of a Google employee who became a multimillionaire from stock options granted when the company was a startup. Similar to stock options, Stock Appreciation Rights (SARs) provide value based on the stock's appreciation without the need to purchase the stock.

5. **401(k) Match**: The 401(k) match is a form of retirement savings where the company matches a portion of the employee's contributions to their 401(k) plan, often up to a specific percentage of their salary. Employees are encouraged to contribute enough to their 401(k) to maximize the employer match, as this is essentially free money that enhances retirement savings.

6. **Bonuses**: Bonuses can be categorized into signing bonuses and performance bonuses. Signing bonuses are provided to incentivize new hires and may come with "golden handcuffs," meaning the employee must repay the bonus if they leave the company within a certain period. Performance bonuses are awarded based on individual and company performance, typically reviewed annually. These bonuses are tied to performance review scores, which assess factors like project impact, innovation, and collaboration.