Base Salary Compensation

Knowledge is negotiating power. Knowing your worth is an important first step. Read below to find out your worth. A common strategy is to ask for 10-30% above your last salary or the industry average. This buffer zone will help you as the “back and forth” negotiation occurs. When startups are cash flow sensitive, increasing the base salary can be difficult. Some alternatives that can increase your base salary include 3 or 6-month reviews to increase your salary based on performance criteria or a sign-on bonus.

Variable (Bonus) Compensation

Typically, variable compensation is 10-30% of your base salary and is paid quarterly or annually. This performance-based or bonus awards are usually tied to your specific and measured performance or profits that your division generates.

Equity or Stock Options

Stock options and startups are synonymous in today’s lucrative IPO economy. Much attention has been made in recent years with this topic. Negotiating your option amount is a science in and of itself. In general, the earlier the startup, the more options you can ask for, however, there is more risk of failure in the early stages. For executives, a 3-10% ownership, or equity stake, is common. Other details you can negotiate include: cliff vesting (where more options are vested up front, instead of equal amounts every quarter) or reduce the vesting period from 5 years to 4 or even 3 years, or have a portion, say 25% vested up front, or receive a discount on the price of the options (strike price),10-20 discount is standard. Also, don’t forget to ask for stock options each year versus just when you are hired.

Benefits (paid and non-paid)

Small companies usually get creative and diverse with their benefit offerings, especially if they can’t pay high salaries. The importance of benefits definitely depends on the individual. See our list of benefits to familiarize you to what’s out there. Some value a sold health plan while others value free technical training. Many companies put together a standard benefits package with few differences. Benefits that many new hires seem to negotiate include: vacation, telecommuting, flextime, tuition reimbursement and relocation. All of these are valid and can translate into indirect cash in your pocket.

The Art of Negotiating

Now you have more insight on what to negotiate, and which benefit means more to you. However, negotiating is a give and take process, so you need to find out (perhaps from current employees if possible) how far your new employer is willing to go. Do have an “absolute bottom” (a minimum salary and benefits) and then know when to move on. Negotiating your pay and benefits takes practice but the outcome will last for a long time beyond the job.


Sample Benefits (paid and non-paid)

Stock option plan

Stock purchase plan (also known as employee stock purchase plan)

401(k) plan (with an attractive company match)

Pension plan

Profit sharing

Vacation time (3 weeks to start, 4 weeks after 3 years of service)

Medical insurance (PPO or HMO selection)

Dental insurance

Vision insurance

Life insurance/AD&D & Long Term Disability

Flexible spending accounts

Educational reimbursement

Credit union

On-site child care

Sick days (10 per year)

Paid holidays (10 per year)

Sabbatical/personal leave policy

Tuition reimbursement

Paid outside training

Telecommuting

Business casual everyday

Low-interest loan from company

A fitness health club benefit