As you grow your marketing career and move your way up the ladder, it’s likely that at some point as you move into leadership roles that you’ll be offered stock in the form of Restricted Stock Units (RSU’s) or stock options as part of a compensation package. Understanding the advantages and potential drawbacks of this sort of remuneration will be critical as you start considering major career moves and working with marketing executive recruiters.
Companies offer restricted stock and stock options for many reasons. A startup may not have enough cash available to pay for the caliber of talent it wants in pure salary, so it can offer stock to early employees while it builds momentum. Businesses will often structure their stock options to encourage retention, making more available over a period of several consecutive years of employment. It’s also a form of performance-based pay that motivates employees to work hard to grow the company and increase its stock value so that their own personal holdings increase in value as well.
Marketers in particular often meet the idea of compensation through stock with some hesitation or confusion–it generally means getting a little less immediately but with potential for long-term gain. Is that a risk your lifestyle and approach to personal finance can handle?
In truth, stock benefits can be quite valuable to the right person…but knowing what’s fair in various scenarios doesn’t come second nature to someone who is being offered it for the first time. This uncertainty can cause you to miss a big opportunity both from a career and compensation perspective, so it’s important to understand your options and personal situation to be prepared when the time comes.
Determining What’s Right for Your Marketing Career
At the end of the day, the only person who can determine whether stock-based compensation is favorable is YOU. Compensation dispensed in stock has the potential to grow significantly over time. However, the future value of stock isn’t guaranteed; it could go up substantially or shrink depending on corporate performance over time. When considering stock and stock options as a trade for your expertise and time, think hard about the following:
Your Tolerance for Risk
The difference between salary and stock as compensation is risk. Depending on your personality, place in your career, lifestyle, financial situation, and a myriad of other factors, you may find that risk is more or less palatable. If you’re willing to take a calculated gamble, you’ll often find–especially at established firms–that you’ll be rewarded in the long run. But it’s also fine to have reservations about that kind of investment.
The Company’s Future
The probable and potential long-term value of stock compensation should certainly influence your decision. Consider; how much potential does the business (and its stock value) have to grow (or shrink) over time?
A disruptive tech startup could see explosive growth (imagine staking employee stock options at Facebook when it was first building momentum)–but the reality is that about 80% of startups end up failing in their first couple of years. On the other hand, an established firm in a more mature market is more likely to find sustained long-term success–but will generally be less likely to find opportunities for dramatic expansion.
Learn as much as you can about the company and its current leadership. Do they have a viable plan and vision for growth, or are they in a holding pattern? Has the company hit a ceiling, or is there still market share for it to take and new frontiers to pioneer? If it’s an industry you’re not particularly familiar with, it will pay to do some research on how it’s trending–you probably don’t want a lot of stock from a business whose product will be obsolete in 10 years.
Your Ability to Make an Impact
Another big factor that should play into your consideration of stock is your confidence in your ability to step into a new role and drive meaningful, organization-wide growth.
If you are absolutely sure that you’re a strong enough marketing leader to take on a new position and move the business forward to growth, then stock begins to become a more attractive option. After all, as a talented marketing leader you have great influence of the destiny of the company–and by extension its stock value. On the other hand, if you’re just looking to climb another ladder rung and fill an empty seat then your impact on stock value will be minimal.
More Considerations for Marketers from a Marketing Executive Recruiter
Don’t be penny wise and pound foolish. As a marketing executive recruiter, I can’t count how many otherwise smart marketers have balked at the idea of getting paid anything other than a traditional salary and overlooked tremendous opportunities. In reality, stock and stock options are entirely reasonable compensation and are used frequently at a variety of different businesses all the time. At the very least, don’t let the idea of it scare you away; take the time to learn more about the opportunity and make the decision that will be best for your marketing career long-term. When in doubt, work with a trustworthy and experienced marketing headhunter who understands your value and can guide you through the hiring and negotiation process.