Sales Secrets to Landing a Lucrative Compensation Plan | Devon Hennig | MSP #282

I'm Mario Martinez, junior

CEO and founder of Réseau, and we are the creators of Y message.io, the free personal writing assistant and text expander application. On each episode of this podcast, you will hear from sales leaders, practitioners, and influencers to help you grow your sales numbers at scale. So get your pen and paper or iPad and keyboard and start taking notes as you're now listening to the moderate selling podcast. Ladies and gentlemen, welcome to this episode of the Modern Selling Podcast.

And today I bring you a very interesting topic. And that is all around sales compensation how we get paid. It's been a while since I've had any topic related to this, and I know you're going to love it. And with me today I've got my guest, Mr. Devin Hennig, and he actually, if you haven't heard of him, you probably have. But author of eight books, including The Senior Compensation Bible and How to Be a BP. So I'm excited.

Devin, welcome to the show, my man. What's good Mario, how are you doing? I'm great buddy. Thank you so much for joining us today. I'm excited to talk. Do me a favor. I told a little bit about yourself, obviously, author and, of the two books that I mentioned. But there's a total of eight out there. But tell us a bit about your background, and then I've got a very special question I want to ask you. Sure. Well, hey, what's up? Modern nation. Modern selling nation.

Do you have a name for your, your groups here? You know, that's a great. That's a great call out. Seven years running. Now, they're just modern selling podcast followers. But I love the idea of the modern selling nation. I love that. Go ahead. Wanted write. Asian modern seller, I don't know. Well, we'll workshop it. There you go. But hey, everybody, my name is Devin. Maybe you've seen me on Tick Tock trying to teach people about compensation, telling funny corporate story, stuff like that.

I don't dance, though, so it's not that kind of tick tock. Maybe I should. Maybe I'd be way more famous, I don't know, but, the channel is boardroom confidential. If anyone wants to give that a nice little follow. Thank you very much. And, yeah, compensation is my thing, but I'm not from H.R. I did not study total rewards. I'm not a lawyer. I'm not a financial advisor. I come from the exact side of the table. So I was VP of marketing at a handful of both startups and public companies.

And then I basically made tons of mistakes negotiating my own comp over the years left millions of dollars on the table, didn't know the right benchmarks, undersold myself, all that crap. So now I'm here to help other people avoid those mistakes. So yeah, I mean, not for me. Are sometimes that means I'll say things HR people probably wouldn't say, but it's worked out pretty well and you can kind of judge for yourself there.

So hopefully today we can help you feel way more confident about comp and, how to negotiate it. Well, I'm excited to have this conversation and clarify for me. Is this geared towards your strategies towards leadership roles or even individual sales roles? A lot of it is leadership focused. A big part of my I guess message is like, if you don't ask, you don't get it's negotiation in general.

But maybe some of the stuff we talk about would be more suited for more senior leaders, others, you know, yeah, those models don't get fed. So you can try it and see for yourself how it goes. And, you know, is your best judgment in the room kind of thing. Fair enough. Good. Well, I always ask all my guests a very important question, and I'm looking for something juicy. Devin. So give it to me. And that is. Tell us something nobody knows about you.

Even if they're looking at any or all of your social profiles. Just don't confess any sins and change anything. This is tricky because I have a blog and I post like everything about my personal life, so what is not online might be, well, my my wife's a winemaker. So we're in, like, the Niagara region, and I've never, never met a wine I don't like. I'm all about this lifestyle. So if anyone's, like, near Niagara Falls. Hit me up around a winemaker. Interesting. And so this is not a hobby.

This is a full time job for, Yeah, well, she's just finishing kind of her program that she studies at Niagara College and kind of getting into the whole, like, actual winemaking now, but, it's pretty cool. I guess that's more a fact about her than me, but, you know, I'm just an extension. So that's okay. You guys are one. That's that that that's what you guys said as I do. So you became one half. Her wine is mine. Whatever that. That's right. There's.

So, do they call that? No. I guess a winemaker is different than a Somalia. Is that right? Yeah, different. It's like viticulture. More, So. All right, all right, well, if you think of something different that's just about you, then feel free to jump in. But, you know, I'm that one. Well, listen, this is, it's great to have you. I haven't had this topic around sales compensation, really, in a long time. And I'm very curious.

Obviously, I've sat in the leadership role, as you know, I've also sat in the individual contributor role. You can't get the leadership without sitting in that IC role. But let's talk about some of the biggest mistakes you see sales leaders making when they're negotiating. Their compensation. Sure. So maybe I might start high level and then we can work our way down to specifics. Like, I think there are lots of little mistakes people make.

But if you're talking about call it the big three, I generally say that those have to do with what, how and why. So the three things that are going to make you good in comp negotiations are again, what, how, what, what would be just knowing about what you can ask for. And I think most of the folks I talked to and work with, especially newer leaders or more senior people like they just aren't as good negotiators because they don't know what's possible, especially if they're new to leadership.

They've probably only ever negotiated salary bonus vacation, maybe a couple benefits, and that's it. They just they don't know as much about severance and milestone payments and advanced equity terms and all that extra stuff. So I find that there's generally a knowledge gap between what people think they can negotiate and all the extra stuff they could actually get. And then number two would be that whole piece. So a lot of folks, maybe less so. Your listeners just aren't used to negotiating.

So most people aren't in sales. They don't change jobs that often. They're not really used to, all the things that good sellers do, like how to handle objections, how to make sure you're not going first and using ranges and odd numbers and all those little like, tactical things. So, you know, even if you are a seller and you're used to doing that with a product, you might not be as used to doing it with yourself. And that takes a whole kind of different, part of the brain.

And different, you know, exercise of going through your own positioning statement and your own, you know, USP set in a sense. So that's that's a whole exercise is helping people figure out the how to negotiate it. And then third, like, almost most importantly, might be the why. And this is a huge setback for a lot of people. It's 100% mindset. It's like a lot of folks think, why should I even negotiate?

Like, why don't I just take the first offer because they're scared they might, you know, need this really bad or they, again, aren't as used to it. So they don't want to seem greedy or they're worried they're going to lose the opportunity or whatever, when in reality none of that is is is true. It's incredibly rare that the offer breaks down at the the final stages.

So it's that mindset piece and being okay with pushing back on it and realizing that you have to drum up more leverage and use it when you got it kind of thing. So those I think would be the big buckets of the mistakes. I see people not knowing the what everything they can negotiate how how to actually nitty gritty do it and the why. Like having the confidence to go in and get what you're worth. Does that make sense? Yes, absolutely.

So since you mentioned the what, let's take some time to talk about, what should, an individual sales leader optimize for in their comp package early in the career versus later?

And, and you obviously mentioned salary commissions, vacation, you know, so maybe some of the individual benefits. What else is there. Yeah. I mean I'd love to provide value and go through kind of like all those specifics and benchmarks and stuff as much as possible. We've got some time here. We can do that. But you just frame that question in a really interesting way, which is, you know, what should you optimize for? Especially at different points of your career?

I think your question was just like, if you're younger, if you're earlier on, what do you want? Versus if you're later on and you have some wins and exits, what should you optimize for? And I think those are very different. And I've talked to a lot of leaders about that, and I would encourage people to think about it like this.

Or at least this is how I've thought about it, which is when you're young, try optimizing yes for cash because cash is important, but also experiences like if you're growing your career when you're young, you want to get those wins, those experiences, those assets that are going to translate into leverage for more equity and wealth over time that you can, you know, get a little bit later on if you hit the lotto and you're at a startup and you're young and you get stock options

that are actually worth something one day, great cherry on the top. But, in general, you know, folks in their 20s are just starting out in their career. I would really, really, really, emphasize the point of like trying to look for for wins. Now in your later on in your career when you're older, that's going to likely flip around. So, it's funny, I think, Scott Leese was the guy who introduced us. Right. And Scott has a great phrase for this, I think in this, in his own colorful way.

He says, you know, if you are like an older VP, you're probably looking for your money, right? Like you're going to look for something that's more going to change the game for you and your family, like you had your, you know, your wins along the way. Your you know, your your leveling up every time you've got all this experience that's going to be worth more to a company. So that's when you're going to be skewed to optimize for more equity. And some of the larger like lump sum cash opportunities.

So anyway, I would just summarize that as saying young experiences cash older. Yes. Cash. But mostly things that are going to translate into more wealth like the equity piece. Okay. So you gave you mentioned younger experiences cash. But that's just one element. You give me what other things are, what do you mean when you say experiences? I'm not necessarily sure if I understand what you mean by that. And you said, look for wins.

You know, we always talk about there's base salary, there's commissions, there's equity, there's certain benefits.

Generally you could do this like, you know, vacation time or, you know, sick time. What are some of the other things that would be on top of that? Yeah. When I say cash, usually I mean that to say like cash compensation. So a mix of what your is, what your variable is, what different bonuses look like, things that are like pretty tangibly liquid cash to you within about a year or whatever.

Whereas non-cash or more, call them like intangible benefits or the equity thing that's going to have to play out over a longer period of time. So, when it comes to. Yeah, like all the, the main components of an offer that I think people could improve or that I, you know, would love to go through would be call it the base piece, the bonus piece, the severance piece. Yes, the equity piece. And then some kind of like creative additional things

that we could go through. So, maybe we would start with, bonuses.

Bonuses are a really good example of, like, you know, there are so many different structures, they're kind of all over the place, but there are some really common mistakes that, I like to try and see people avoid, which especially if you're a sales leader who's getting into, like going beyond being a seller themselves and having your own quota, but like managing larger teams and now almost behaving more like an executive than, you know, your strict commission structure that you have previously,

you're going to have a more executive type of bonus and incentive structure, right? So I would call it these kinds of things. If you're heading into that again, senior director, VP, even CRO role kind of thing, which would be number one mistake. Often bonuses are just way too low at those levels. Like I see, you know, 15, ten, 15% bonuses of OT sometimes. And I just don't know how that can be motivating for people, like a huge fan of trying to get that variable piece up to like a 20, 30, 40%.

I help someone negotiate like a 7,580% bonus. The other day, who wasn't even in a sales role. So I like seeing a bigger, meatier bonus without having to sacrifice base. The second mistake I see is definitely like, no accelerators or caps on the bonus or like the bonus would be cap. So this is something salespeople are generally more used to. Is the accelerator piece other roles? Not so much.

So I educate folks on that a little bit of the time. And then number three I would say would be, more creative types of bonuses. So. Again, as you're. Heading into like more of a leadership role, I'd be really trying to think creatively about things like milestone bonuses.

Think about things like sign on bonuses when you're getting into your new role, ways of protecting your bonus and your severance package, things like that, that really add value over time and milestone bonuses specifically or something. I'm like, really, really passionate about. I just helped, a CRO negotiate their set a new start up like a really young bootstrapped company.

And, you know, at that type of company, there wasn't a bunch of cash to throw around, and they weren't interested in giving him equity. So we had to come up with a really juicy bonus structure where, you know, we put big bounties on certain goals where if he was hitting certain revenue goals, he was going to unlock big checks along the way. All the way up to 100 million.

So anyway, there are just creative things you can do, that are going to add a lot of value once you're not like relying so much on commission anymore and getting into more of those executive roles. Roger that. Okay. So, you talk about in the book some black belt negotiation moves that most people don't know about. Expand on that. Black belt negotiate. Yeah. I mean, a lot of them are just things that people don't think about. Right.

Like the milestone payments perfect example. It's a very low single percentage number of people who actually have those negotiated them. But beyond that there are other like creative things like funding. Participation is another one. I've seen people negotiate the ability to like, participate in the company's future round. If it's like a younger company, that adds up to a lot of value for them over time. Certainly a lot of like the terms on your equity can get pretty creative.

I mean, equity we can talk about because a lot of people have questions about like stock options and risks and all that. But, there are definitely terms, things like double triggers and acceleration and the protection terms and all that kind of stuff that, again, a lot of people don't think about but could add a lot of value to the offer. So all those are kind of more black belt, not one on one topics, but call them like 200 on 301, 401 kind of topics. And, yeah.

I mean, I'm curious for yourself too. I would love to hear about, like, what you think you've seen as like some black belt moves or do you have any little, like, special moves when you've been negotiating comp that, that you would call out. Yeah. Well, one of them is a commute, stipend. So actually, in my last stop as the VP of sales, we had to, they wanted everybody in the office to San Francisco, and I said, okay, that's fine. That adds on an extra two hours to the day.

So I need, a gas card. I need payment for my Bart, for monthly pass. And I wanted to be able to park right up in the front. And I want to be able to have, payment going for my Bart pass because you're asking me to be in the office when I can effectively do this job, you know, virtually and on occasion when we need to be. I'll be there. And then, I'm looking for a monthly stipend for food. If I'm going to be there, you know, generally I would be eating here at home so I can save on that cost.

But now you're in. Now you're increasing my costs. So, as a result of being in there, and, in order for me to be able to take a lunch, that means I have to get up extra early, and that's time for my sleep. So you either pay for it or I show up in the office when I need to show up in the office.

And so I ended up getting all of those things, including a monthly stipend for food, because I was one of my key questions was, hey, you know, are there any places inside the building that we work at that employees can go to be able to get food for free and no charge. And it was no. And it was like, all right, well, have the option of working at company A, which has that or company B, I'm happy to work for company B, but you don't have that perk. So what's my stipend on a monthly basis.

And those are actually some super small things. Right. But you know, the fact that they paid for all the gas, Bart, transportation here in the San Francisco plus the Bart pass. And then I got a monthly food stipend that I could use on the corporate card. Was perfectly fine for me, and it was no cost to me. And so now. That they even that, and I like, how hard did you actually have to go for that? Let me think about that. I think, the SVP, the SVP had to go, get approval.

He said he absolutely had done the Bart transportation and, the transportation costs, but not the monthly food stipend costs. But, that was within 24 hours he got approval, or he made it sound like he needed to go get approval.

Which which was fine. Equally possible, but I, I love that. I love that whole thing. I hope people like, jot down the talk track. You just went through, because it's so help. A lot of it is just how to frame this stuff, how to like, ask for it without sounding like a douche. And if you have that, you know, a little bit of justification and you're not looking greedy or whatever, it can just make a big quality of life there. In fact, like that's how I tell people do ask for it.

Sometimes it's generally saying like, hey, I know. Well, I mean, if you can justify it perfectly like you just did, go ahead and do that. Otherwise, you know, you could say something like, hey, I know it's a little left field, but something that would make a big quality of life difference is blank. And whether that's a gym membership or executive assistant or association fees or, you know, travel or whatever it is. Generally you're right. It's not like a huge dollar amount.

It's more like, the perceived value. It's like the perceived value is high for it. Right? So it's going to be a win win. Yeah. Well actually I forgot about the, you mentioned that the gym membership, you just that was like right under the radar screen, right there. But that's actually a good one because that one I was like, hey, listen, I'm having to commute. And, my gym membership is right here next to my house for this particular gym.

So I won't be able to do that because by the time I get home, it'll be 630, 7:00. So I need a local gym membership. And so they were like, okay, we can do that too. You know, you'll have whatever it is, 35 bucks or 40 bucks a month to be able to have wear the gym membership so you can go exercise. And any guys like modern selling nation, this is not like just a VP thing, right? Like I've seen junior people, junior junior junior people get gym memberships, right? Because it's like that 40 bucks.

I'm like to the company that cost is small and the value for the employee is high. So it's like, just sit down, audit your expenses. Like make a wish list, throw them out. Like you're going to probably be surprised what they say yes to. Yeah, absolutely. And you know, you don't think about these things, especially when you're thinking when you're talking about quality of life. Right. So thinking about the gym membership, it was the rationale was quite strong.

And that was you always ask a question about, hey, the place that I'd be working at, do they have a cafeteria to be able to serve at? No cost to employees? Let them say no, because the individual who you're speaking to is now going to automatically identify a negative. And then you do the. Oh, really? And then now in the back of their mind, they're like, oh, shoot, I'm deficient. And so it's like this and then shut up. Then just don't say anything. Let the silence, let them stew kind of thing.

Right. Sure. Yeah. I mean that's again black belt negotiation strategies. Right. And then another one when I ask the question, so great. So, you know, this is going to be right down, down, a San Francisco on, on, post Street. That's awesome. Actually used to work right there next to that building. I'm sure there's a gym inside the building. Yeah. No, not that I'm aware of. No. Pause. Wait. Yeah, I don't think so. I can double check on that. Yeah, please double check.

Because, you know, if I think about this because I have to come to the office and you want everybody there by 830, which is, I understand. But now the problem is, is I have to leave my house by 715 to get on Bart, to be there for at 730 train. That will get me there at the 815. It's about a five minute walk, so, you know, I'll be there, you know, there at that time and then unfortunately, you know, work doesn't stop at like 3:00. So I can't, you know, be home.

So I'll be in the office till at least 530 or maybe even six, which means it's an hour long commute back home plus a ten minute drive. So I wouldn't be home to like 710. That would really impact, you know, personal health. Let us sit on them and now it's coming back, right? It's coming in like, you know, you're going to ask for these small, incidental things that you get a stipend to support your, your, your gym membership or your whatever it might be.

And the way I, would negotiate it is the following. I'd like, a, a payment for the full year's membership. Oh. Well, why don't we do on a month to month? It's cheaper, though, for you guys if they do a full year. Yeah. You're right. Okay. Well, how much is that? Well, I mean, let's take a look at it. Now, the idea is, is that what if I leave in six months because I hate this particular place?

Well, now I've got my gym membership paid for, and so I'm going to look for the one that 24 hour that's going to give me all club past. Yeah. Okay. Then I got to waste some time clawing that back. I mean. No, not at all. Not trying to you're not trying to be mean and evil here. But like, you know, and sneak pull over people's eyes. But it's smart. It's, you know. Well, it's no different than the company demanding of you. You know, your commitment.

For example, I brought on, you know, two to, two new developers this past May. One of the biggest challenges that we had was we had a lot of technical debt. Yeah. And technical debt in in this conversation is that we were behind on so many different things and that we needed to catch up.

And so, you know, I said to them, hey, if you come on, I want you to know that this is not a 40 hour a week job, right? For the next 60 days, we're going to go hard and we're going to do these two things. If you hit your goals and accomplish them, then this will be the the impact of the long term, impact. Are you willing to commit to that? And so sometimes there's things that the company asks of you that you don't get extra compensation for. Right?

And so as a direct result, they ask of you, so why would you not ask of them? I want my yearlong membership. And if I end up leaving in six months or earlier because it's not a right fit, I still walked away with the gym membership. Yeah. I think the trickier part comes in when you've got a lot of things you want. Right. So it's like more of the order of play here. It's you don't want to just like throw a million things at them and be like well I deserve all and less like a million things.

But you, you know, you also can keep coming back to them again and again and again for things. Once you figured out this, then, oh, wait, one more, oh wait, one more, oh wait, one more.

So, that's another kind of area that I think is a fine balance people, can, can be careful around, which is, yeah, order of play getting like the core offer figured out and then getting to the stuff that's sweet into the pot and thinking about what, the priority of your asks are because a lot of what we just mentioned, gym membership and the Bart pass and whatever, it's very probable that you're going to get those like, it's it's quite likely that they're going to say yes

if you ask for it the right way. But they're also not that valuable to our earlier point. Like, you know, in the grand scheme, the dollar figure just isn't a life changing amount. Right? So how do you put that beside a percentage of equity that they're going to give you? That is, you know, a lot, a lot, a lot more potentially.

So I think that is something I've tried to do on my bucket list is come up with a chart that's like a whole, diagram of like, what is high value and high probable versus what's high value? Low probable? Low probable. High valuable. I said that right I mine's twisted but anyways like go through the right order of things to ask for based on the expected value of them. And that's, that's generally where I would start. So you mentioned earlier reviews. Reviews. Nso's. Right.

So talk a little bit about what that means. And, the benefit to an individual at the startup phase and what it initially, what that would mean, because a lot of folks joined the startups to be able to get the stock options. But necessarily don't understand how that works. And because most people leave the company and the stock options were pretty much worthless. So talk a little bit about that. Start from like, you know, talk to us as if we were first graders. What is it? What's the value?

What can you get out of it? How do you negotiate them? Sure. So this could be like a series of podcasts. Obviously there's there's a lot with equity. And again, I will caveat all of this by saying, you know, talk to your financial advisor, your lawyer, yada, yada, yada. But I mean, equity is definitely the huge elephant in the room a lot of the times. Like so many people are intimidated by it. You know, we're not investors. We're not founders.

We're not, you know, looking at this stuff every single day. So the terms are weird and the, you know, how you value it is, is foreign to a lot of folks. So this is what I would say. Basically, I mean, I believe a lot of the audience for this podcast at least are in tech and startups and SAS. Right? So, most of the time, if you're talking earlier stage companies, you're going to be in a situation where you're earning stock options, right?

Later down the road, you might be at a place like a public company, for example, where you might have stock options, you might have what are called rescues, and they behave a bit differently in how you exercise them or how you get them and how they actually transform into actual stock. So anyway, it's there both ways of getting your hands on equity in the business and the big intimidating thing here, or kind of what is really hard to find are benchmarks around that.

So when you're when you're presented with an offer at a startup that says, we're going to give you some stock options, we're going to give you a way to like be part of the, the, the actual ownership of the company. We're going to give you this many stock options, they might say, or we're going to give you this dollar amount of stock options,

they might say. And a lot of people just like it's Greek, they don't know. They're like, okay, fine, I'll cross my fingers and like hold my breath kind of thing. And I would say that in all of this complicated stuff, what really matters is knowing two things. Number one out the number of stock options you're getting or you're getting that number, they're going to go to you. And number two, the total shares outstanding of the company.

Because if you know how many you're going to get and you know how many there are at the company, you can calculate what percent of the company you will own if you eventually get them, invest them, and yada yada, yada. But that percentage is like the only thing that matters. There are other things that are, you know, yes, important too.

But if you're evaluating the value of an offer and this actually the equity that they're putting in front of you, you should be able to say, at least on your napkin math, like, okay, I own this percent of the company. So they're saying it's going to, you know, they want it to get to this point. How likely do I think that's going to happen? How long do I think I'm going to be here? And you can like, yeah, run some napkin math to say ballpark what this might be worth.

Of course, there are never any good guarantees on this. And yes, a lot of people call it a lottery ticket because it kind of is. Right. So I would say that you should still, you know, make your cash and benefits the driving force of your offer. But equity, you know, learn the basic stuff again like, fuck it, follow me on TikTok should buy the book and whatever because there's so much to get into there. But, equity really is like the only way you're going to get rich. Rich?

And it's that conflicting part where, yes, you want to optimize for your cash today, but equity, like Navarre says, if you're a follower of Nouvel or whatever, like equity is the only way you're going to generate significant wealth with some asterisks there. I have seen sellers do remarkably well. I have seen milestone payments pay remarkably well. And people get, you know, quite well off without the equity piece.

But by and large, equity is where you hear all the, you know, the rags to riches stories in the, in the news. So whether it's stock options, whether it's shoes know what side of you're getting. And then compare that to benchmark. So you know if you're at a startup and you're a proven, you know, person with a good track record, you know what to do. You can come in and help them get to whatever goal they want to get to. You're going to be able to command like, some points on the company, right?

Like call it if you're Seed series A and you're coming in as a VP with experience, like you can get 1 or 2 points of the company. If it's. Later stage. Obviously you're going to get less because they're farther long and you're not taking as big of a risk. So that kind of all scales differently depending on what stage of the company you're at. But again, just know those benchmarks, know what you got. And and don't like be super rigid about it.

Like, there's no hard rule of how much you have to take if you think the upside is incredible. Like it could be okay to take less, right? But just be informed. I guess it's my PSA. And then the only other thing I would add is, as you get to later stage companies and public companies, often what you're going to get is, like a dollar figure, like they'll say, oh, we're granting you 100,000 or 200,000 or something. Of these reviews.

And personally, I find it's still confusing, but like, I would be aiming for having a multiple of your base on that number. So easy math. Let's say that, you know, you have a $200,000 base or 100 out. Let's use 100 so you have $100,000 base. I would personally be shooting to negotiate like 200 or $300,000 in that initial grant. As a, again, rough benchmark at a minimum, 1 to 1.5. And a lot of offers start much below there. But they can increase even if it's a public company.

Like, the first time I worked at a public company and I was negotiating this, you know, they're like, oh, if you ask for more, we're going to have to go to the comp committee and get this approval. And it sounds like big and scary, but it's actually not that big and scary, like, especially if you're reporting into the executive team. Like, they can go to this comp committee and you know, they're going to be motivated to bring you on if they really want you. So there is flexibility there.

That was my long winded, equity rant. But to do that. Now, Devin, you mentioned there were two things I think, correct me if I'm wrong, that, in my opinion, there's a few more things that you want to understand. So, first off, you want to understand the vesting schedule, and you also want to understand the fair market value. If it's a stock option, there's usually gonna be apply to fair market value.

If as a restricted stock unit, there's going to be an assessment of a discount, usually off of, a certain price. And then there's that vesting schedule. So I think what people need to understand though is, is that the equity pieces is the long tail. The cash compensation is the short tail, meaning what am I going to get paid today? Every single month, every single week or biweekly or bi monthly. Plus my individual variable compensation. But the equity is generally the long tail.

For example, in stock options, you're going to have anywhere between a 2 to 4 year long vesting period, and you're going to have a cliff, meaning that, you can't get anything unless you've been, say, with the company for at least one year. And or you may have a vesting period, like if it's a three year vesting period, it's 136 every single month. So 36 months to be able to fully vest off of the stock stock options that you've been granted.

The reason why I think it's important and correct me if I'm wrong and I'm just going to give some basic math and tell me if this math is right, but let's just say, stock options worth $0.01 or the fair market value. Sorry, is $0.01 you want to know what that starting point is? Because if the company gets acquired or the company sells and they sell for less, just use $5 and $5 a unit. And I'm just going to do some math. And you were granted 10,000.

That's what you were granted 10,000 stock options. So you would take 10,000, multiply it by five, which would be a value of $50,000. You would also take that 10,000 and then you'd multiply it by I said $0.01, so you'd multiply by $0.01. That's 100 bucks. So the value of that is 50,000 -$100. Am I right on that math and what that would look like and what you want to be thinking about in terms of that long term compensation.

Yeah. So a couple of things I you're right, I didn't mention vesting and exercise periods and all that previously. Because generally when you're negotiating it definitely you can run all these scenarios. But it's still sort of like in the clouds. It's sort of like. Anybody's best guess. Maybe it's $5, maybe it's $7, maybe it's $12. Oh my god. But it's the percentage that that that matters initially.

You're right that when you know, your, granted these options, there's going to be that strike price, which is like what you're going to have to pay to acquire them. And the difference between that strike price and what you eventually, you know, sell them for is your, your what you earn off of them, basically your profit off of them. So in your situation, yeah, your $50,000 minus your hundred bucks is what you stick in your pocket minus the taxes and all the other stuff like that.

Yeah. Now what you mentioned with the, vesting period superimposed don't understand. I mean, yes, a lot of these, especially tech companies have the one year cliff. Interestingly, what's been a trend is, longer exercise windows, which I'm, I'm happy to see. We can talk about like, what's, what's going on out there right now. And there's, there's a lot of rough stuff. It's like really hard and in a lot of, areas.

But, one positive shift I saw in the recent pavilion report was that exercise windows are, you know, in the past, typically really short, like if you leave a company, especially right year, you only have like six months to exercise your options or maybe a year. But, a lot of folks have been really fighting for, you know, multiple years, ten years call and Cadmus talks about that all the time. Right.

So there were in this report, like 50% of people now have like two year windows or more, which is nice because, you know, it's it's a tricky call for anyone who's been in that position before.

You know, who you are when you're listening right now is like, okay, I'm leaving. But like, God, should I pony up the cash to buy these things because I don't want to have all that work I put in for years, just like vanish and not get that equity that I feel I've earned. And what if it amounts to something down the road, but, you know. Oh, that's going to stretch me right now.

I don't know if I have the cash to like go and exercise something like it's a real big internal battle whether or not people who leave companies want to do that. So the longer amount of time that you get to exercise is positive for the employees. Got it. Okay. So, generally speaking, however, vesting periods and cliffs are usually non-negotiable because they're tied to some sort of employee plan. Unless you're one of the first 5 to 10 employees of the company. It. Would you agree with that?

I would put, some asterisks around, kind of like seniority again. Yeah. You're you're you're a typical individual contributor. You're wrap your, you know, associate level kind of person, like, yeah, they're not really going to be able to negotiate much on their equity most likely. Like they just don't have a lot of leverage. They're not like coming in as a CRO type person.

But if you're a CRO coming in with huge, you know, track record and they love you and they will bend over backwards to get you kind of thing, there's a lot you can negotiate with your equity that other people might not be able to get. So. It. It depends.

Things like acceleration, the double triggers, the clawback protection. This having it in severance, like a lot of those, like I said earlier, like the 301, 401 topics like Hemby negotiated. So I would just caution people, especially more senior people like, don't just take what they give you. This is a big point in your career, especially with something that could potentially be worth a lot. So get smart about, the what the, the pieces that you could an attack on to it. Gotcha.

I would argue that the bigger the company is, the less flexibility there is in negotiating in various terms, because they usually have an equity compensation plan for people and usually the barrier for, for for the, for employees, excuse me. And usually the variables inside those equity compensation plans are the amount of reviews, or options that I'm going to allow you to, to read that I'm going to give you,

and there's probably not a lot of other flexibility, like, you can't negotiate the fair market value, can't usually negotiate like the discount off. You can't usually you can't negotiate the, vesting period. You know, the cliffs, those are things that are, like, usually non-negotiable in an earlier startup. However, sometimes that would be negotiable because they usually don't have an established plan, and they're trying to build talent in areas that they need to excel at.

So they might be willing to have a custom plan specifically for an individual, like a like for me, I don't have a co-founding, chief technical officer. So if I were to bring somebody in, usually that chief technical officer would probably come in anywhere between 4 and 8% equity to be a co-founding chief technical officer, certainly not more than that, because they didn't start a company, they didn't come up with the idea or build the prototype.

If they're coming in at a, you know, pre-seed or seed stage. So it kind of depends. And you got to kind of know, like what that is. You made some mistakes. I think you talk about, when negotiating compensation early on, talk about what lessons you learned from that. I mean. Yeah, I was young and dumb and had no experience, so I didn't necessarily like earn. I wouldn't have been able to negotiate as much as I could

now anyway. Right. But I think it, maybe it's a broken record at this point, but it's the the the what? How? Why? Like, I think I made a lot of mistakes around not knowing the things that I could negotiate, not knowing how to negotiate them. So like, for instance, and I'm not alone here, like severance recent report, the pavilion thing again, it's like 71% of executives right now do not have severance.

And that's pretty criminal because that's one of the most like, no brainer things you should be able to negotiate. And I never thought about it. I always thought it was like one of those like, oh, a prenup in a marriage. It's like, you just don't talk about, oh, it gets people thinking the wrong thing or like, whatever. But when you know how to ask for it and the fact that you're asking for it, like for termination without cause, like, changes the conversation completely.

So it's things like that that are just mistakes a lot of people make. And evidently that, you know, many, many, many people make because if 71% of executives don't have severance right now, that's just an education problem. Same with I mean, my early bonuses suck. It's like, you know, just the structure of them was all terrible. I didn't, you know, I didn't have. I didn't have any equity in. The first startup that I was part of, like, fresh out of school.

Thankfully, later, they kind of, like, made good on it a little bit, but, like, I had no idea how to ask for the stock option piece of it. And, you know, as one of the first 30 people at that company, be pretty dumb not to get a little piece of it. So I've made all sorts of those mistakes along the way. I have share certificates collecting dust in my basement that were probably bad decisions, like, you know, the list goes on.

But, that's why I'm putting out so much content right now, trying to help people avoid those kinds of dumb things just by knowing what they can get now. Severance. I never thought about actually tell me what what what are how would you even negotiate that? Because I've never actually used that inside of a negotiation. What are you asking for? Right. So severance is, a protection piece, right?

Like, especially at a higher title and more senior roles, it's going to take you longer to find an executive level job after you leave somewhere. Right. So the idea is you're going to guarantee an amount of your salary while you're on that search. And standard is typically around like three months of your base pay for again non cause termination scenarios. So these are scenarios that are not performance based that are not like in your control.

There's some other thing that happened that resulted in this job loss. So it's you know making things right kind of thing. And again the like the standard being three months of base pay for non caused termination is, is like the bare minimum I would say I really, really encourage the executives I work with to shoot for. I mean a year and the best case scenario, but at least like a six month sort of time frame and there are all sorts of other fun things you can do with it.

I don't know if severance is ever fun. I shouldn't use that. But, like other pieces that you can tack on. So, you know, thinking about incorporating a prorated amount of your bonus so you don't lose out on your variable if you leave, like a day before the end of a bonus period or something, or making sure that your equity continues to vest throughout your severance, period.

So there are, you know, those types of things, health benefits, including that like just things to like keep you going and kind of protect your, your bonus and your equity because you've earned it type thing. So yeah, I, I love helping people with that because it's definitely something they don't think about. Okay. So I, that's a new one for me. I have never thought about that.

And so you're saying, pre negotiate in your offer that if there is a severance, for what reason is it any reason other than cause or including cause. In the, the actual like agreement language. It's it's always like termination without cause kind of thing. And every employment agreement has like a termination section in it. Right. So like read that, get together with your lawyer, please.

Especially if you're more like, you know, if it's senior and complicated offers and and all that, like, you're going to be wanting to talk to somebody, and make sure the language is airtight. But yeah, like termination without cause is what you're protecting against. Interesting. And you're saying that, at a at a very bare minimum, pre negotiate a three month severance inside their bare minimum. All right, I like it. That's a that's a great point.

And would you say that that's a C-suite type of, element that you renegotiate or how far down the stack in terms of, your level? Would you say that that's something you can negotiate? I mean, definitely C-suite, definitely VP, even depending on the size and stage of the company like director, senior director, head of head of titles are always really fuzzy, but like can mean different seniority. So, those types of leadership roles, I would certainly, be asking about it at the offer stage.

You got it? Yep. Great point. I never thought about doing that. So, hopefully I don't have to go out and get a job, anytime soon. But if I did, that would be something that I would include right inside there. I never thought about that. Great.

Well, see. This is the this is the part of the show now where you you you open the kimono and you show your comp package and we go through it. So, let's bring it up. Mario. Okay. Well, underpaid. I make, two and a half, three and a half acts. Or maybe two and a half. Two and a half, less than what I did as a, VP of sales. And I've been doing this for eight years. And then the question you have to ask yourself is, is why?

And now the thing is, is because I get the privilege of being able to build something, control my own destiny, and hopefully I make it big, when we, build out fly message and all of its associated components. So there is a long tail game here, and not all executives are in my position. Right. So at a certain point inside a building, a startup company, you start to see accelerated growth. That's when you can start increasing your salary, and those types of things.

But in that particular regard, you know, I'm the owner of the company and have majority share of, of of the stock in the company. So if things go wildly successful, I win. If things go wildly south, well, I lose. So it's kind of like one of those that that big hit. But what I would say in new startup companies, the data that we have seen is if you look at your first ten employees, those ten employees are usually the ones that are going to get the most amount of stock.

Now, if you're hiring for a C-suite, for a very specific element, that's a co-founder, you're going to be giving away 4 to 8% right off the right off the get go. But it's going to be done in increments. So three 2 to 4% might be what you get. As part of your starting. And then as you hit milestones, you'll get five, six, seven, eight over the course of time. Right. So you can really negotiate that out.

Again, that is for a new startup that you are getting a, C-suite, maybe even a slash co-founder type of role. However, if you're one of the first employees of the company, generally what you're seeing is it's like 1% is that first employee, 0.7, 5.5, naught point, two five. And it goes down from there, for the for the first employees.

And what you have to keep in mind is, is generally for a startup company, you're going to allocate around 10% to maybe 15% of your total stop pool for employee stock options. So if you're getting 1% out of the first what what I'd say 100 to 200 employees, you're going to have the lion's share in terms of like a founding employee of the company. And so that's what we see generally there in that particular regard. If you're coming in as a C-suite, not as a co-founder, you might get a point.

You might get two points at most. And that in the, startup phase, which is that pre-seed and or seed round where they've done a price round. So that's what I've seen, at least from my perspective. And again, that keep in mind, it's all about that fair market value. It's usually an option a stock option. And so that fair market value is generally priced really really low. But your payout is a 3 to 5 year long plan. So I think that's what people a lot of people miss in the startup world.

But how many. People stay there. 3 to 4. Exactly. And that was my point is, is that if you're going to a startup, you have this idea of the big when is it possible

that the company can be sold in one year from when you start? Yes. And that would trigger your your buyout. That would trigger an event, right? Totally cool. But you have to think of equity as a long tail. That is usually that 3 to 5 year long plan before an exit happens. And I think one of the key questions that a, individual needs to ask when they're going to go work for a startup is what is the exit plan, is it to IPO or is it to be acquired?

Or is this going to be a lifestyle business where the CEO, because it's a lifestyle business for the CEO, stock options mean absolutely nothing. But if it's something that you're planning on an exit, what does that exit period look like? And are you willing to commit 3 to 5 years? Unlike many folks who want to change jobs like we change underwear, every 1 to 1 and a half years. So 1 to 1 and a half years ago work at a big company and get the shoes. If you're looking at a big equity stake.

Case in point, I know of an individual who recently purchased a house. The house was, $1.2 million. They offered $1.8 million in cash because they were one of the first Facebook employees. And they made out really, really, really well as a result of, having those stock options so long tail gain, that's what you have to be thinking about. That's my. Perspective. Many of those Facebook employees have also lost all of it by now.

There's a really good episode of Money Wise that just dropped that talks about that. But, I agree. And, you know, I was just in a similar situation, that CFO story I told earlier where, like you said, maybe there's a situation where the founder, it's a lifestyle thing or like they're holding on to it. They're not selling as far as the eye can see. That's where I would be leaning on those milestone bonuses that I had mentioned earlier. Amen to that. Good point.

What's the longest you've stayed at a job? Well, it was 14 years, but it was ten. And for, and how it happened was the first four years was a spin out of a fortune 100 and they, invested $1 billion into a startup, company. I was one of the first 35 employees, and we grew to about 3000 employees. They decided to pull the entire plug in the dot bomb era, and they asked me to stay. And I was one of the last two employees.

And then I was told that if you stay with us, we'll find your home in the mothership. And so I stayed another ten years. So it was a total of 14 years. And by the way, on that in terms of that was in the days of, one when you got a pension from private companies and two, when, you, you got your, vacation time and sick time. So story the story goes, is first, I was one of the last years that the pension was invested into the into an individual. Now, don't get me wrong.

I'm not going to be rich, but it's like a thousand bucks a month when I come of age. And that thousand bucks can pay my property taxes, right? So it's actually really beneficial in that regard. And it's a guaranteed pension. And I have not bought out and they've offered multiple times. We want to buy you out. We want to buy you out. Put it into for one K. And I'm like, no, I want that pension. That's like my security blanket.

But when I went to go leave the company, and this from the story when I started, there were 80,000 employees. When I left, there were 40,000.

And I had literally laid off enough people in my lifetime that I never wanted to do it again. That's just not something I wanted to be a part of. And so, at that time, I was on paternity leave. My boss called me and said, I know that you wanted to take the severance package when we're going to do a round of layoffs, there's an opportunity, and I was going to be a paternity for I think it was, nine weeks, some of the vacation I was using and some of it was for paternity leave.

And he suggested, why don't you come back to work, help us transition out the business, pick the right players that are going to stay on the team. It'll be about two and a half, maybe three weeks of work. And this way you can save all your vacation time. And then if you take the severance package, you're going to get two years for every month and you'll get paid all your vacation. And basically, I had a year long severance.

And so I got to stay home with my second son was born, and I stayed home for eight months after he was born. Nice. Nice. I mean, you're a unicorn. No one stays that long in jobs, but I'm the same way, like, I, I had actually been at a startup for, I don't know, just 7 or 8 years. So I asked the question because it comes back to like the equity investing thing. It's sort of like the average ten year is super depressing right now. Last a year and a half, maybe two years kind of thing.

And sometimes it's leaving voluntarily, sometimes it's not.

But like if you're only there a year and a half or two years, like you will not see the full value of your equity vest. And that needs to be part of your calculus. When you're doing how much is this offer worth when you're you're interviewing and trying to like, negotiate, right. So, I mean, I know that some people are a fan of job hopping because that's how they get their big bumps every couple of years. And, you know, it is strategic.

And some people like that, other people like, I don't know, there are downsides to it and certainly that equity piece is one of them. You know, is the grass really greener? Starting over is hard. Like, you know, just kind of in include all of that in the decision. It's it's a tricky one. Are you do you usually tell people like job hopping is a good idea, like you know or. No no. No no. Oh my god. Like, yeah. This thing of moving jobs, every one year or one year, every two months.

That's outrageous. You got it. Look, it takes you six months just to get your bearings, at a new organization. Especially if it's a large one. And, as a salesperson, there's no possible way, unless you were handed a bluebird right out of the beginning, that you're going to have any story that can be sold to the next opportunity in a year. And you shouldn't expect whatsoever that you're going to get a promotion every six months. That's outrageous. You need to put in the time.

You need to think about how to be able to develop and expand your career, and you need to think about how you can build a story.

And that's super important. Case in point starting in 1999, when I started working as a telemarketer, now called SDR, I started tracking all of my accolades, at a from a software company, all my accolades, all my kiosks. I have a nine page document to 2015. I've literally, literally this long of every accolade that I was awarded and given or asked to do because of my exceptional selling skills or achievements or whatever it might be.

And so when I went from job to job, I presented that and was like, here's my history, here's what I've done. Asked by the vice president to do this, asked by the president to do that, mentored such and such, achieved 100% this achieved. And so I had that and I could go job to job and be able to sell my skill set and my, my talent, into an organization. And then I started 2015 and started carrying it on on LinkedIn. If you go to my profile now, you'll see that I've got over 137 recommendations.

I've got, for people that worked for me, plus clients. Now I've got over, I think, 80 or 90 different, awards and recognitions that are inside there and publications and projects where I've been featured at. So, you know, you got to really build your story. And that's the best advice I can give to a, those that are first level, second and third level, even. Director, you can't change jobs like you change underwear. You got to build your story.

And stories are the best way to sell products all the way back to our, you know, original. Like you are your product when you're negotiating for roles. And I generally, you know, it's a bit of a hokey exercise when I tell people to do this. And I, I think it helps, which is to write up a positioning statement for yourself, almost like what you were just going through with like, hey, here's what I did. It's sort of a summary of like, I'm an early stage VP.

I'll go in, I'll get you to 25 million in revenue. It's going to take me 2 to 3 years. That's what I've do. I've done it six times. I've consulted with 12 companies, see. And it's like all the proof in the pudding and that like, okay, that lights people up.

And, if you're on it, you know, if you're on a road show and you're in a lot of interviews, talking to a lot of people, at least make sure they all understand that and they, you know, in a very crisp, succinct way, know that, you know, what you're doing. This is what you're about and what you can do for them. Deb, and this has been a fabulous conversation. We're out of time. I went over time, as a matter of fact, as a result of this, I super appreciate your time. Do me a favor.

If someone wants to connect with you, if the modern selling nation wants to connect. Your nation. What's the best way is at Twitter, TikTok? LinkedIn? How do they get Ahold of you? Yeah, yeah. The nation should know. Mainly TikTok is where I'm at right now at Boardroom Confidential. So that's where you can get all the videos and whatnot.

But if you want help with compensation right now, if you are interviewing, if you're talking about compensation at work, if you're gunning for a promotion or whatever, three things I think could bring you value. Number one is the senior compensation Bible. So that's what we've been talking about, which is my ultimate guide to cash bonus is equity 30 plus perks you've never heard of kind of thing. So that's compensation bible.com. And then I also do comp consulting.

And I can also help negotiate an offer with you. So if those are interesting if you want some help, if you're mulling what I'm growing, reach out. I'm on LinkedIn. You can find me or in the show notes here, I'm sure. So it's been fun. And, thanks a lot, Mario. Fantastic. Well, listen up, guys.

I got one last question for you, Devin. And that is your all time favorite movie. What is it? This wasn't even hard. This is Jurassic Park, hands down. This is the golden age of, like, action movies. So, oh. I guess we can't play the music. The podcasts get taken down. But, after you listen to this, go to YouTube. Listen to that John Williams. It's beautiful. I love it. Well, there it is, Jurassic Park. And for all of you listening in right now, the modern is selling nation.

I love Devin's new term. I'm going to start using it. Modern selling nation. Don't turn that down quite yet. Listen to this very important message right now. Thanks for listening to the Modern Selling podcast. Please do me a huge favor and give the modern Selling podcast a five star rating and review on iTunes. Oh, and don't forget if you'd like to say 20 hours or more in a month and increase your productivity, go right now and download fly message. That's fly msg.io for free.

It's your free text expander and personal writing assistant. Hey, thanks for listening in. And until the next episode, good selling. You.