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New Rules for Negotiating Stock Options
by Michael Chaffers
One of the striking changes over the past three or four years has been the impact of start-up Internet companies on the way executives, and indeed many employees, negotiate their job compensation.
Today, everyone wants to negotiate stock options and demand signing bonuses. While many of the old rules of negotiation still apply in these heady times, a few new ones need to be added to your checklist, especially as you negotiate for nontraditional compensation items like stock options and signing bonuses.
Here are some suggested new rules:
- Ask for what you need. Otherwise, you may not get these nontraditional compensation items.
- Use your informal network to get the information you need to negotiate stock options and signing bonuses. These items change so frequently that traditional compensation Web sites and newsletters cannot keep up. However, your peers and contacts in the field may know who is getting paid what.
- Create an auction for your services -- when companies have to compete to hire you, they will likely offer you more than they otherwise would.
- Be prepared to negotiate continuously, since the market changes much more frequently than it did in the past. Eternal vigilance helps you stay on top of the compensation curve.
- Tie yourself to a trigger clause that automatically increases your compensation. Instead of renegotiating a raise, try to link your salary to that offered to the newest hire on the same level, or the average of the salaries offered to peers at your closest competitors. When they get raises, so will you.
- When the music stops, make sure you have a chair at a company with good fundamental business prospects and you have garnered the skills to really add value to them.
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