Job Offer - Lower Salary - Equity Counteroffer?
Discussion
Morning all. I'm a regular poster on here but have used a temp username as you never know who reads these forums!
Bit of background; I am a project manager for a top 5 construction main contractor. I am young for the position I am in and even through the recession I have never been short of job offers from elsewhere, none of which have really tickled my interest until now.
At some point over the next few years my intention is to either go it alone, or possibly look for an equity stake in an existing company - obviously this would need to be in a smaller company looking to grow.
In my area a lot of small to medium construction companies have folded lately, and as a consequence there is a big gap in the market for the right small company to grow into a significantly larger company to fill the void. I have recently been approached by a company in exactly this position asking me to make the jump. Because I come from a large company background where a lot more systems and processes are in place that the smaller company does not have, I know I would offer them a lot. I also have my own client base to take with me, if the offer is right.
I had an initial meeting with the smaller company last Friday which went very well - they are a young, dynamic company who have a clear vision of where they want to go, and because of my background I know I could offer them a lot.
My current salary is £46k and when he asked what salary I would want to go, I said £53k which is the industry average for that position, so to my mind, not unreasonable. However, I've received a call off the same guy this morning asking if I would go for a second meeting with the owners next week, and would I be willing to take a drop in salary to go to prove my commitment. The short answer to this is no, to which he said "when I joined I took a drop in salary." What he probably does now know is that I know he is one of the equity directors, so of course he would have been willing to take a salary cut?
My question is this, I would be willing to take a cut to join them, if they would add some equity into my package, even if it was only a small amount to begin with, possibly increasing based on performance and results. Is this a ridiculous suggestion? Would I be willing to take a drop in salary on its own - no.
Bit of background; I am a project manager for a top 5 construction main contractor. I am young for the position I am in and even through the recession I have never been short of job offers from elsewhere, none of which have really tickled my interest until now.
At some point over the next few years my intention is to either go it alone, or possibly look for an equity stake in an existing company - obviously this would need to be in a smaller company looking to grow.
In my area a lot of small to medium construction companies have folded lately, and as a consequence there is a big gap in the market for the right small company to grow into a significantly larger company to fill the void. I have recently been approached by a company in exactly this position asking me to make the jump. Because I come from a large company background where a lot more systems and processes are in place that the smaller company does not have, I know I would offer them a lot. I also have my own client base to take with me, if the offer is right.
I had an initial meeting with the smaller company last Friday which went very well - they are a young, dynamic company who have a clear vision of where they want to go, and because of my background I know I could offer them a lot.
My current salary is £46k and when he asked what salary I would want to go, I said £53k which is the industry average for that position, so to my mind, not unreasonable. However, I've received a call off the same guy this morning asking if I would go for a second meeting with the owners next week, and would I be willing to take a drop in salary to go to prove my commitment. The short answer to this is no, to which he said "when I joined I took a drop in salary." What he probably does now know is that I know he is one of the equity directors, so of course he would have been willing to take a salary cut?
My question is this, I would be willing to take a cut to join them, if they would add some equity into my package, even if it was only a small amount to begin with, possibly increasing based on performance and results. Is this a ridiculous suggestion? Would I be willing to take a drop in salary on its own - no.
So they want you to reduce what you're asking for "to show commitment"? I'd be tempted to suggest they show some commitment to you by paying the industry average. If they are scrimping on your salary as part of an effort to maximise the money they are going to chuck at expansion, then asking for an equity stake makes good sense. Commitment is a two way street.
An equity stake may be all well and good but it's not like they are some tech start up which are going to be bought to make all equity owners millionaires over night. The equity may be worth nothing in a very short space or time and in that time you will have been working for less than you are worth.
There are tens of thousands of small construction companies to choose from. Don't put yourself even the slightest bit out by moving.
There are tens of thousands of small construction companies to choose from. Don't put yourself even the slightest bit out by moving.
Edited by vescaegg on Wednesday 10th December 19:04
ATG said:
So they want you to reduce what you're asking for "to show commitment"? I'd be tempted to suggest they show some commitment to you by paying the industry average. If they are scrimping on your salary as part of an effort to maximise the money they are going to chuck at expansion, then asking for an equity stake makes good sense. Commitment is a two way street.
This man talks sense.You know the industry so you should have a fair idea of what the company's prospects are.
Without equity, signing up to a pay cut does not make sense. You should be looking for a significant pay rise with any move especially if you are bring a client base with you.
If they can offer equity, I don't think you can dictate the terms of that equity allocation. There are different types of equity such as "sweet equity" that have enhanced conversion ratios into the underlying equity etc etc. These can be complicated incentive plans but if the prospective employer wants you, he should have no problem in allocating some equity to you. If he does, I would expect you may be asked to pay something towards the allocation - seen as commitment to the cause and you would probably have to agree to some additional terms such as extended notice period or non- compete clause. In such cases, the potential reward can be significant even if it isn't a dot com company. For example, if the company's profits double over say 5 years, you could be looking at a multiple return of 10-20 times your investment. This is where the gearing or terms of your equity allocation come in to play for the "key" personnel.
If you intend to work your butt off and are confident in delivering - if you have faith in the management and your new bosses and feel you have some control in your future then equity allows you a great opportunity to benefit from the potential upside. Also, you don't spend it until you receive it so it's a great way to save.
Don't underestimate your potential value to a smaller competitor. If they really want you, they will pay.
Good luck.
Without equity, signing up to a pay cut does not make sense. You should be looking for a significant pay rise with any move especially if you are bring a client base with you.
If they can offer equity, I don't think you can dictate the terms of that equity allocation. There are different types of equity such as "sweet equity" that have enhanced conversion ratios into the underlying equity etc etc. These can be complicated incentive plans but if the prospective employer wants you, he should have no problem in allocating some equity to you. If he does, I would expect you may be asked to pay something towards the allocation - seen as commitment to the cause and you would probably have to agree to some additional terms such as extended notice period or non- compete clause. In such cases, the potential reward can be significant even if it isn't a dot com company. For example, if the company's profits double over say 5 years, you could be looking at a multiple return of 10-20 times your investment. This is where the gearing or terms of your equity allocation come in to play for the "key" personnel.
If you intend to work your butt off and are confident in delivering - if you have faith in the management and your new bosses and feel you have some control in your future then equity allows you a great opportunity to benefit from the potential upside. Also, you don't spend it until you receive it so it's a great way to save.
Don't underestimate your potential value to a smaller competitor. If they really want you, they will pay.
Good luck.
The way I see it is...
You could work for other businesses and jump jobs to increase your earnings
Or
you could get a stake in the business and current salary to +15% that you asked for.
The dividend income should not be sniffed at if your risk pays off. The world is full of idiots who want to cash out for big bucks. Decent dividends for a medium term is a huge asset by itself to have.
The current business may be a small player, but if you see the way to get their cash flow moving and managing the processes, they will make you good money for a few years.
You could work for other businesses and jump jobs to increase your earnings
Or
you could get a stake in the business and current salary to +15% that you asked for.
The dividend income should not be sniffed at if your risk pays off. The world is full of idiots who want to cash out for big bucks. Decent dividends for a medium term is a huge asset by itself to have.
The current business may be a small player, but if you see the way to get their cash flow moving and managing the processes, they will make you good money for a few years.
vescaegg said:
How small are they? A lot of even medium sized companies are worth f
k all on paper.
Some headline figures for year end April 14;k all on paper. T/O - £19.2 million (up 4%)
Gross Profit - £958k (up 50%)
Cash in bank - £2.4 million
Total assets - £7 million
Total liabilities - £5 million
They've been trading for over 100 years so not a flash in the pan company by any means.
jfbrin said:
Without equity, signing up to a pay cut does not make sense. You should be looking for a significant pay rise with any move especially if you are bring a client base with you.
Totally agree - and unless equity is part of the deal I won't be going for a pay cut.jfbrin said:
If you intend to work your butt off and are confident in delivering - if you have faith in the management and your new bosses and feel you have some control in your future then equity allows you a great opportunity to benefit from the potential upside. Also, you don't spend it until you receive it so it's a great way to save.
Don't underestimate your potential value to a smaller competitor. If they really want you, they will pay.
Good luck.
Appreciate your input and positivity - thanks.Don't underestimate your potential value to a smaller competitor. If they really want you, they will pay.
Good luck.
If you leave your current job, you loose redundancy and employment rights for 2 years, so You ARE making a commitment. The risk that they can leave you high and dry in the next 2 years, and you'll have no employment law back up. That to me is commitment.
Play hardball.
If they want you, they should pay, and that includes signing on bonus, a decent pension, and a pre-nuptial which details the cost of them dumping you.
Play hardball.
If they want you, they should pay, and that includes signing on bonus, a decent pension, and a pre-nuptial which details the cost of them dumping you.
mysteryuser said:
Some headline figures for year end April 14;
T/O - £19.2 million (up 4%)
Gross Profit - £958k (up 50%)
Cash in bank - £2.4 million
Total assets - £7 million
Total liabilities - £5 million
They've been trading for over 100 years so not a flash in the pan company by any means.
They can definitely afford to pay you more than the industry average then, so they need to start showing you some commitment. You moving jobs is a big risk.T/O - £19.2 million (up 4%)
Gross Profit - £958k (up 50%)
Cash in bank - £2.4 million
Total assets - £7 million
Total liabilities - £5 million
They've been trading for over 100 years so not a flash in the pan company by any means.
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