Considerations for Promotion Offer

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Topic Author
KNomad
Posts: 33
Joined: Fri Nov 16, 2012 1:25 am

Considerations for Promotion Offer

Post by KNomad » Tue Jan 14, 2020 12:18 am

I'm currently a mid-level manager at a mid-sized technology company (500 people, ~$80MM net revenue). I manage a team of pre-sales consultants and product strategy SMEs. I've been heavily involved in building out new product offerings and onboarding new enterprise-level clients to those new products.

Pertinent info-
-I live in a MCOL area.
-My current compensation is about $210K.
-I've been at the same company for 5 years.
-33 years old.
-Historically I've traveled 75%, but have been able to cut back in the past year.

My company is owned by a large, publicly-traded EU firm that is looking to sell us.

My company recently acquired a UK based company with technology that is complementary to our technology. We share some mutual clients and are building a product together, but the plan is to run these two companies separately (different boards, different exec teams, etc). I've worked with this company for several years and I've co-pitched clients around the world with the newly acquired company's (will henceforth refer to this company as NAC) CEO, CTO and head of business development and get along well with them.

The CEO and CTO of NAC report to my company's head of corporate development. NAC's CEO, CTO and our head of corp dev have asked me to take on running North America and Asia Pacific for NAC. I'd be responsible for all business development, account management and product strategy in these regions. This would be a substantial promotion in terms of responsibilities. I'd give up managing my team, but build out a new team as the business grows.

My main considerations are-
-My company (along with NAC) is likely going to be sold by our parent company in the next year. I was already thinking of leaving for this reason, and also because I feel like it's time to explore opportunities elsewhere.
-NAC's technology is best in class, but many of their potential clients in the US have acquired companies that fill this technology need. I have doubts as to how successful NAC can be in North America. There is a lot of runway in Asia, but NAC has historically been priced too high for that market.
-I'm pretty burned out on travel and this role would require me to travel extensively, both domestically and internationally. My current role will require a couple trips to Australia and Europe this year, but will probably keep me at 25% travel.
-There aren't a ton of options locally for other companies to jump to.
-There is a lot of uncertainty in my company's future given that we are up for sale, so I kind of feel like I might as well take on this new role while I continue to look around.

I'm expecting a formal offer in the next several days and expect the comp package to come in at $260K-$280k. From a career perspective, is it a no brainer to take this role? Are there any other considerations I should take into account or other things I should be asking for?

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LittleGreenSoldiers
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Re: Considerations for Promotion Offer

Post by LittleGreenSoldiers » Tue Jan 14, 2020 1:06 am

Do you have a vested equity position in your current employer?

25% travel isn't really that much. Unless you just don't like it. Personal/family choice. Mine and my family's ability to put up with the amount of travel in my career(~75%) is one of the primary reasons why we are have been financial independent since my mid 40's and looking in to retiring by early/mid 50s'.

Is the new move to $260K from $210K a no brainer? I don't know?
Q1. Are the benefits at the new company in line or better/worse then current company?
Q2 Is any of your compensation variable or based on performance?
Q3. Is the new company larger/smaller than your current employer?
Q4. Is the new company domestic or another international company?

Personally I'd wait at least 6 month until after the purchase of your current company and then see what the new structure and compensation/benefits are like.

Topic Author
KNomad
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Re: Considerations for Promotion Offer

Post by KNomad » Tue Jan 14, 2020 1:53 am

Thanks for the reply. I had a small amount of equity in my current company that was paid out when it was acquired by our parent company.

Q1. Are the benefits at the new company in line or better/worse then current company?
They are identical.

Q2 Is any of your compensation variable or based on performance?
Current comp is $160k base and the rest variable. I expect new offer to be $180k base and the rest variable.

Q3. Is the new company larger/smaller than your current employer?
NAC is 35 employees, all UK based.

Q4. Is the new company domestic or another international company?
NAC is entirely UK based. It's too early to know who will purchase my current company, but it will likely be a large multinational corporation.

25% travel hasn't really bothered me, but I did 3 weeks a month of international travel for 4 years and got a bit burned out doing that.

German Expat
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Re: Considerations for Promotion Offer

Post by German Expat » Tue Jan 14, 2020 8:58 am

A couple questions and points:

1. Do they allow you to fly business class overseas? Having a lot of international travel this can make a huge difference.

2. A major consideration would be how this helps in a a future job search. You mention that with either jobs you see potential future issues after the company is sold. Would you be better off or worse in this case when looking for new opportunities?

3. How safe is the variable part in the new job? You do not sound yet too optimistic about selling NAC's product in the US or Asia.

Topic Author
KNomad
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Re: Considerations for Promotion Offer

Post by KNomad » Tue Jan 14, 2020 12:49 pm

German Expat wrote:
Tue Jan 14, 2020 8:58 am
A couple questions and points:

1. Do they allow you to fly business class overseas? Having a lot of international travel this can make a huge difference.

2. A major consideration would be how this helps in a a future job search. You mention that with either jobs you see potential future issues after the company is sold. Would you be better off or worse in this case when looking for new opportunities?

3. How safe is the variable part in the new job? You do not sound yet too optimistic about selling NAC's product in the US or Asia.
Great questions.

1- it depends. We get a $1000 per flight supplement to upgrade to business class. This was enough for me to upgrade each way from US to Europe and US to Australia last year, but it heavily depends on particular flights.

2- I think taking the new role could help since it will have a good title. I've got some feelers out to other companies and it would probably help future negotiations to have a higher comp plan now. On the negative side, some people in my network think it could posthole me since it would be harder to step down to roles more lateral to my current position.

3- I'm neutral for Asia/Australia and kinda negative on my outlook for North America. Need to get formal offer before knowing what to forecast for the variable earnings.


Somewhat related- should I ask for some kind of consideration in my contract that outlines compensation should this position be eliminated in a merger?

Topic Author
KNomad
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Re: Considerations for Promotion Offer

Post by KNomad » Tue Jan 14, 2020 12:51 pm

German Expat wrote:
Tue Jan 14, 2020 8:58 am
A couple questions and points:

1. Do they allow you to fly business class overseas? Having a lot of international travel this can make a huge difference.

2. A major consideration would be how this helps in a a future job search. You mention that with either jobs you see potential future issues after the company is sold. Would you be better off or worse in this case when looking for new opportunities?

3. How safe is the variable part in the new job? You do not sound yet too optimistic about selling NAC's product in the US or Asia.
Great questions.

1- it depends. We get a $1000 per flight supplement to upgrade to business class. This was enough for me to upgrade each way from US to Europe and US to Australia last year, but it heavily depends on particular flights.

2- I think taking the new role could help since it will have a good title. I've got some feelers out to other companies and it would probably help future negotiations to have a higher comp plan now. On the negative side, some people in my network think it could posthole me since it would be harder to step down to roles more lateral to my current position.

3- I'm neutral for Asia/Australia and kinda negative on my outlook for North America. Need to get formal offer before knowing what to forecast for the variable earnings.


Somewhat related- should I ask for some kind of consideration in my contract that outlines compensation should this position be eliminated in a merger?

German Expat
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Re: Considerations for Promotion Offer

Post by German Expat » Tue Jan 14, 2020 1:34 pm

I would not ask for a consideration if the position is eliminated in a merger. If they value you enough they keep you and if not they let you go. You could ask for a longer termination period but this cuts both ways in case you find a new job at a different employer.

I would ask for some guarantees on the flexible part of the compensation for year 1 with a floor because you won't know the business well enough yet and might well end up with less money in year 1.

It sounds though you are a 1 man show for a while with a fancy title or do I understand this not correct? Looks like you can build a team after things work well (you write as the business grows).

It can be a good opportunity if things work out well but there is the additional uncertainty of your company being sold. Dependent on the buyer your job might just get absorbed into their organization. On the other hand it can help build your resume and you gain additional experience. But to me it sounds like you could quickly go back to 75% travel and you need to be ok with it.

Stick5vw
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Re: Considerations for Promotion Offer

Post by Stick5vw » Wed Jan 15, 2020 5:20 pm

If you are responsible for building a business from scratch, you will be travelling constantly. Been there done that, and it can become quite a grind - especially if you aren’t sure the business has any runway. If you are burned out on 25% travel can you handle more than that?

How many times would you need to go to Asia? Building an Asia business from the USA seems like a very tall order. Those flights are long and the jet lag is a killer. I would ask for business class on anything longer than a 3 or 4 hour flight, domestic or international.

More importantly do you think this company can increase its market share in the US and Asia? If it’s not a proposition you can get behind, you will quickly lose interest.

Your guaranteed comp (base) will increase by $20k, is that right? After tax, that will be smaller. Is that bump enough to compel you to take the role? The bonus is probably not guaranteed (right?) and this is heavily dependent on results - which seems like it would depend on the market share question raised above.

If you can successfully build the business, yes, it can be a game changer for your career (financially and in terms of the future opportunities) - and personally I think international experience is a unique opportunity professionally and life-wise that everyone should seriously consider if it makes sense. (Including international relocation)

What happens if you don’t take the job? Can you walk away from this opportunity with no problems or will you anger your superiors?

these are the main fundamental questions I see right now

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8foot7
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Re: Considerations for Promotion Offer

Post by 8foot7 » Wed Jan 15, 2020 5:39 pm

What strikes me is
1) not enough of a bump in base - lots of benefits are calculated off base and not variable/total comp. Sounds like a ton or work for 20k more pre-tax. That right there is a red flag.
2) I'd want guaranteed business class on overseas flights with all of the travel
3) variable should have a high guaranteed floor first year and a lower guarantee the second year so that you don't end up taking a pay cut for more work

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Misenplace
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Re: Considerations for Promotion Offer

Post by Misenplace » Wed Jan 15, 2020 6:03 pm

This thread has been moved from Personal Consumer topics to Personal Finance (Not Investing) (questions regarding employment).

Moderator Misenplace

Topic Author
KNomad
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Joined: Fri Nov 16, 2012 1:25 am

Re: Considerations for Promotion Offer

Post by KNomad » Thu Feb 13, 2020 2:19 pm

This process took a long time due to company politics, but I've finally got the offer.

There are some moving pieces, mainly that I was given a new bonus plan this year that significantly increases my earning potential in my current role.

My current compensation-
-$158k base
-$40k bonus paid at $10k/ quarterly
-$7k yearly retention bonus (strange that this exists and is so low, I know)
-$40k stretch bonus, should we exceed our financial plan. This is new as of Mid-January. My department has a goal of $68MM in net revenue this year, and for each $1MM we exceed that goal I get an additional $7.5K up to a max of $40k. It is conceivable that we exceed our goal this year.
-Total comp plan is $245k. I'll realistically earn somewhere between $190k and $220k this year.

New offer (again, at a recently acquired subsidiary of my current company)-
-The role was originally presented as a Managing Director role, but has been scaled back to "Head of Business Development, US and APAC"
-$165k base
-$65k bonus
-$40k in stretch bonus. I'm getting details today on how exactly the bonus components are calculated.
-Total comp plan is $270k, not sure yet how to project earnings for the year.

Guaranteed business class isn't going to happen since the subsidiary is chasing EBITDA numbers for an earnout. Their CEO and CTO visited my office recently and both flew back to Europe in Economy :oops:

My main considerations now are whether or not I'm comfortable with the bonus plan (again, waiting on details) and whether or not it makes sense to move from a career trajectory standpoint.

Pros-
-I'm currently in a hybrid role that doesn't exist elsewhere in my corner of the tech industry. My team straddles the line between technical sales, product strategy, program management and solutions architecture. I've talked with friends and acquaintances across the industry and my role doesn't have a parallel at other companies, where people are usually in sales, solutions architecture, product management or program management. I believe that my current hybrid role makes it harder to be recruited by other companies, so going all in on enterprise sales could be a good move in that it would be more transferable.
-I'd have new things to work on.
-The CEO and CTO of this company are on an earnout that ends next year. Should they decide to move on, there may be an opportunity for further advancement.

Cons-
-No more managing a team. I've really enjoyed building my team over the past several years and enjoy teaching and coaching my employees. It would likely be at least a year before I'd have management responsibilities again.
-Very long sales cycle, somewhat saturated industry.
-My current company may be acquired this year. We will either be acquired by a much larger tech company or by one of our customers to take our technology in house. If the latter happens, BD roles will likely be eliminated. My current role would be more valuable to anyone wanting to take our technology in house.
-My initial reaction was that I was very underwhelmed by the increase in base salary. There may be room to negotiate here. I'm feeling this out today when talking to our head of Corp Dev.

What else should I be considering? Thanks for the advice, Bogleheads.

rich126
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Re: Considerations for Promotion Offer

Post by rich126 » Thu Feb 13, 2020 3:13 pm

Sounds like you got some things you were looking for.
Guaranteed business class isn't going to happen since the subsidiary is chasing EBITDA numbers for an earnout. Their CEO and CTO visited my office recently and both flew back to Europe in Economy :oops:
Everyone's tolerance on economy varies. I'm at the point of my life where I couldn't imagine flying economy overseas. I'd use miles or pay out of my own pocket to get extra leg space whether it is just an exit row, economy plus or business class. I've been spoiled over the last 15+ years where every trip I took was personal and I was able to use my miles in one way or another. I can recall the long 24 hr days flying to the mideast a few times but back then I was in my 20s/early 30s.

Can't say I've ever seen a bonus over $5K but my work is mostly government/defense and I'm in a mid range tech position (and don't care to be a manager).

Good Luck.

Topic Author
KNomad
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Re: Considerations for Promotion Offer

Post by KNomad » Thu Feb 13, 2020 3:57 pm

Thanks.

Just got off the phone with my brother, who runs an enterprise sales team at a data-as-a-service company. He was taken aback by the offer and thought it was structured in a very odd way.

He mentioned the following considerations-
-Ask for a commission structure instead of a bonus structure. His team earns 12-15% of top-line revenue from deals they sign in year one, and 3-5% for recurring revenue after year one.
-Make sure commissions are uncapped.

He said that in his org, a good performer would have the following pay structure-

Year one-
-$160k base
-$240K on target earning for commissions ($2MM in net new business per year). Anything above this pays 15% per year.

Year two-
$160k base
$240k on-target earnings for commissions
$60k in recurring revenue commissions (3% of $2MM in recurring revenue from year one)

I'm a bit confused by the bonus plan. Will report back when I hear more.

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8foot7
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Re: Considerations for Promotion Offer

Post by 8foot7 » Thu Feb 13, 2020 4:41 pm

KNomad wrote:
Thu Feb 13, 2020 3:57 pm
Thanks.

Just got off the phone with my brother, who runs an enterprise sales team at a data-as-a-service company. He was taken aback by the offer and thought it was structured in a very odd way.

He mentioned the following considerations-
-Ask for a commission structure instead of a bonus structure. His team earns 12-15% of top-line revenue from deals they sign in year one, and 3-5% for recurring revenue after year one.
-Make sure commissions are uncapped.

He said that in his org, a good performer would have the following pay structure-

Year one-
-$160k base
-$240K on target earning for commissions ($2MM in net new business per year). Anything above this pays 15% per year.

Year two-
$160k base
$240k on-target earnings for commissions
$60k in recurring revenue commissions (3% of $2MM in recurring revenue from year one)

I'm a bit confused by the bonus plan. Will report back when I hear more.
Two businesses I am relatively familiar with pay on a similar plan as the one your brother is suggesting - slightly lower base, a tick or two higher on Y1 and a tail off on recurring after year 3, but largely similar.

Nowizard
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Re: Considerations for Promotion Offer

Post by Nowizard » Thu Feb 13, 2020 5:11 pm

It depends on your definition of "What is best for my career." You are young, and moving up is an opportunity even if it involves at least short-term acceptance of a position that would primarily have the goal of enhancing your professional career. What are your eventual goals, and to what extent do work and non-work activities intersect with them? In a capsuled fashion, it would probably be best to take this position, but my investigation into any major change is influenced by goals that include the possible change but are definitely not controlled by it. Sometimes, it is best to delay what we would prefer to do and accept the offer, at others it is time for change in a different direction.

Tim

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