That Was Then: In a time long long ago (right around 2000) in a land far far away (my Seattle days)… Fueled by the stories of the overnight millionaires from companies like Amazon, and Microsoft, the sign on bonus and stock option were the candidate’s path to “early retirement”. These tools were the precipitous actions of many companies to compete for and attract the high demand skills in a very tight tech market. Companies, with what seemed like limitless VC backing, were offering large sign on bonuses to attract the top talent out of schools and scooping on a big heaping of stock option backed. This master plan all backed by the suitor’s by lofty plans to have their companies product be the next “Microsoft-like” sensation. The conversations with candidates always came around to “what is my sign on bonus going to be” and “how many stock options am I going to get?” Have you ever tried to explain to someone, who is reading daily about millionaires popping up from companies going public, that options should not be weighted so heavily unless they had really researched the company’s viability and true potential long term vision? Then it happened, POP goes the bubble. Hey Ed, how much are those options worth to you now? The tech bubble burst of 2001 brought many people back to me saying, “I should have listened. I should have gone with the fiscally conservative company.” Many of my candidates and friends were back on the market in a market that was tough for even the best developer to be hired.
This is now: Fast forward to 2008. This seems to be the year of the negotiated severance package. The genesis I would suspect being the market turmoil currently unfolding, the hot comp package item seems to be the severance package. More and more people are entering a position with one eye on the door and how they will handle it if the company is acquired or their position is eliminated. This time around the largest of the blue chips, which normally have enough equity and stability to weather even the toughest times, have been decimated by the fact that their investments have almost all bet been reduced to pittance by the instability which is striking at the very core of the financial markets. Candidates are looking to potential hiring managers to define a severance and exit strategy in the event their position is eliminated. Candidates have seen a market unlike any before. Many candidates in the prior market down turns have been able to rest, to some degree, on investment money they may have put away for a rainy day. What do you do when though when your investment money is gone because the market hits near record daily declines? What happens if the company you just negotiated your wonderful contingency severance package with is not around to pay your severance because they had to close?
What will the future bring: The long and short is candidates, more than ever, really have to research the company. They have to dig in the company’s finances as deep as can be found publically or revealed in an interview. If they are VC backed, how much reserve do they have left, what is the “burn rate”? What is the plan when the cash dries up? Who are the leadership? What is their record of accomplishment? Does the company’s long-term vision really make sense and is it realistic? In your due diligence research can you uncover any examples of fiscal irresponsibility? From what you can find, have their actions been consistent with their vision. My advice dig dig dig and be skeptical if a company says it 9 o’clock and all is well!