There are plenty of salary calculators on the Web that can gauge whether a company is paying you fairly or not. But for employees at tech startups, stock options and other forms of equity can count for a lot more than cash compensation.
With that in mind, Wealthfront, a financial advisory firm, is releasing today a free online software tool designed to help those in the startup world figure out how their salary and equity compensation package stack up against others.
“One’s career is the biggest investment decision you can make,” said Wealthfront Chief Executive Officer Andy Rachleff. He said studies show that employees at companies that go public make three to six times more on their equity than on their cash compensation. “That swamps anything you can make through better investment of your savings.”
For the CEO of a company that helps rank-and-file workers invest their savings, that might seem like a strange thing to say. But Rachleff hopes the tool raises Wealthfront’s profile while also providing a useful service for those in the technology industry.
With Wealthfront’s software tool, users can choose their job (software engineer, for example), the size of the company (let’s say 6 to 20 employees) and the region (we picked “SF Bay Area”). The result? A graphic showed that at the manager level, a salary of $168,000 and equity ownership of 1.347 percent would put you at the 75th percentile, while $85,000 and 0.234 percent placed you in the 25th percentile.
The company also shared some interesting data points, based on information from 135 privately held technology companies and a survey of 8,362 non-executive level individuals:
- The mean cash compensation was $112,000. When it came to equity compensation, the mean was 0.072 percent.
- Director-level managers get paid the most and are granted the largest equity packages. But when it comes to middle management, top level engineers and scientists tended to earn more than them.
- Companies with fewer than 20 employees granted the largest equity packages. Not surprisingly, as companies grow more successful and hire more people, they tend to be less generous with shares.