You’ve worked your butt off for a few years now, and you deserve more than just a salary.
Don’t get me wrong — you did agree to the salary, and it’s great just to have a job in this economy. But everyone knows that the top performer in a company can be 2, 5, even 10 times more productive than the next guy.
Yes, the next “guy.” Because the top performer is a woman. 🙂
So you’ve put in your time, you’ve proved your value to the company, and you’re going to continue doing so. And you know that money is tight, so asking for a raise isn’t practical.
What you want are stock options. Or more stock options.
But how do you ask for stock options? What’s your justification; how do you not come off sounding arrogant or pompous or demanding? How do you not put your job on the line?
Here are some specific tips:
Frame the Conversation
Think about this from the other side of the table.
You are asking for a piece of the company, essentially in exchange for nothing more than your continued work which you were already doing.
Now you and I know that this isn’t the right characterization, but this is the characterization you’ll be facing. So you need to frame up the conversation and establish your own words and context.
I mean “frame” literally. There’s a large body of psychological and sociological evidence about how setting the terms of a conversation or establishing the context of a conversation can completely alter people’s behavior and perceptions. Follow those links to read about some fascinating experiments.
Here’s how you can frame up the conversation:
“I want to take a few minutes to talk about stock options.
“I’ve been working my tail off, and I love it. I love coming to work, I love the attitude and culture, and I believe in the product. I’m completely devoted — even outside of work I talk about work. I tell my friends about how cool it is to work here, I write about our product on my blog and Facebook, and I even went out and submitted us to a few contests.
“In other words, I feel like I’m more than just “some employee” here. I work harder than most, I care more than most, and I really feel like the company is part of my identity, not just a paycheck.
“So I was wondering whether the feeling is mutual. If the company values me as much as I value it, it would be appropriate to talk about stock options.”
The context here is that you identify yourself with the company, which is why the company should share itself with you. You’re loyal and this is not just a job, which is why you should be compensated more than just a salary.
Analogy: You’ve been dating for the last three years. It’s time to get married.
Do Not Argue the Past
Here’s an argument you were thinking of making that won’t work:
“I’ve been paid a sub-standard salary for the past three years. I know I agreed to it at the time, but now it’s time to fix it. I think stock options would be a good way to say “thanks” for those years of service.”
[Sound of game-show buzzer]
There are several reasons why this is a bad strategy:
- It implies you’ve been unhappy for three years.
- It implies they’ve been screwing you for three years.
- It implies they owe you something.
- It implies you’ve known this for three years and didn’t say anything until now.
- Therefore, it implies you’ve been lying for the past three years!
All these effects are the opposite of what you want to convey. You’re happy, you’re loyal, you believe in the company, you want to share in its successes and failures. That’s the message.
Besides, you did agree to the salary, didn’t you? You can’t hold that over someone else.
Options in Lieu of a Raise
Most companies haven’t been able to afford raises recently, particularly in 2009 and presumably in 2010.
If you haven’t gotten a raise in a while, and both you and your boss know you deserve one, you have a great chance at arguing for stock options.
“We both know that under other circumstances I would have gotten a raise by now. And I’m not asking for one now!
“I’m not asking for one because that’s what’s best for the company’s cash flow, and I want to see the company succeed. So I propose that in lieu of a raise, I should be issued stock options at the same value as the raise I would get.
“If the options never pan out, the company doesn’t lose anything. If they do become valuable, I’ll be rewarded for sharing the risk with the company rather than demanding a raise that would actually have hurt the company.”
Notice how you’re positioning yourself as defending what’s best for the company, even over your own self interest. That’s part of how you earn the right to own part of the company.
Careful that you don’t get into the trap of complaining about compensation. If you bring up the past at all, it should be framed like this:
“Look, we both know I could get more money elsewhere, but here’s the thing: I’m not asking for more money, and I don’t want to work elsewhere! I want to work here.”
Do it in Person
This isn’t a conversation you can “phone in.”
You’re asking to be part of the company. You’re saying you’re personally invested in the company’s success. You’re asking founders and investors to give up a portion of their potential earnings.
What message does it send about your sincerity if you do this by email or phone?
Put on some decent clothes and look them in the eye. This is serious.
Ask for Retroactive Vesting
Most options have a “vesting period,” which means that rather than getting all your options immediately they trickle in over a period of time. If you leave the company before that time, you lose some of your options.
A typical set-up is “4-year vest with 1-year cliff,” which means for the first 365 days you get nothing, on day 366 you get 25% (the cliff), and then you get a proportion every quarter after that until after a total of four years you’re at 100% (the vest).
Vesting (rightly) protects the company from people who show up, get stock options, and then quit. They barely contributed, yet they get a nice check if the company succeeds.
Vesting is industry-standard and you won’t be able to argue your way around it. (Besides, the vesting rules for the stock option plan are literally written and sealed, so they couldn’t make an exception even if they wanted to.) But what you can argue is the date the vesting begins.
Typically your vesting begins when you get the options, but you could argue it should start when you joined the company. This is fair because the point of vesting is to protect the company against people who aren’t loyal, and you’ve already proved you’re loyal!
Careful, though, that the argument doesn’t degenerate into retroactive compensation.
Emphasize What You’ll Do in Future
Part of your argument is that you’re more than “just an employee.” You want the company to succeed and you’re willing to go out of your way to make that happen.
If that’s true, what does “go out of your way” mean? Whatever it means, that’s part of your argument. You want to show that you really care about the company, not just your primary job function.
- I was thinking of writing a blog series about X.
- I know a few bloggers and I want to press them to write about X.
- I’m a member of a X user’s group here in town, and I want to get them to devote a meeting to us.
- I really think our next hire should be X because the company needs Y.
- I want to start a Facebook page for the company and help promote it.
- I was talking to a customer the other day and I have some ideas for marketing and advertising.
- I was talking to a customer the other day and I have an idea for a way to sell our stuff to a new market.
- Although I’m happy doing my job as X, I’d love to tag along with a person from Y to see how that part of the business works. We’re all better at our jobs if we understand more about how the business looks from all angles.
All this advice is predicated on you genuinely caring about the company, believing in what they do, and wanting to tie your future earnings and reputation to the company.
After all, if the options are worth nothing, none of this matters. And regardless, this job will be on your resume, so it’s part of your reputation.
If you don’t really believe all this, then you’re lying. It might be a way to get some options, but in the end you’re not doing anyone a favor. Better to go find another company that you do believe in, and then devote yourself with appropriate compensation.
If you truly believe it, that will shine through and it will help your cause. If you don’t, that will probably be apparent as well, and you’ll just be the “arrogant prick who’s just trying to squeeze more out of the company.”
Give the love to get the love.
Do you have tips to share? Do you disagree with some of these techniques? Leave a comment and join the conversation!
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Awesome post Jason!
Great tips over all but I have a question for the last set of tips you gave about “Emphasize What You’ll Do in Future”
Do you think we should really say “I want” , “I really think” to our boss?
I say we should be more optimist about that.