How to Negotiate Equity Compensation Without Getting Fooled with Scott Leese
Is base salary king?
Or does equity reign supreme?
After all, nobody wants to sign a contract just to realize a few months later that they could have gotten a better deal!
The million dollar question is, is it really worth sacrificing your salary today for a potential payout in the future?
And what should sales reps (especially those just starting out) know about negotiating stock options in their contracts?
In today’s episode, the Tony Stark of SaaS sales aka Scott Leese talks about the nuances of stock options and equity, contract red flags, what he learned from his own negotiation failures and more.
What We Discuss
- (06:41) How Scott’s communication style has evolved from his early career
- (08:07) Authenticity as a people pleaser
- (09:31) Higher cash salaries vs compensation through stock options
- (14:28) The differences between stock options and equity
- (22:19) Scott’s experience in spending six figures to exercise options that later went to zero
- (25:38) Red flags to watch for in contracts when negotiating compensation
- (34:32) Asking contract questions and negotiating tactically without burning bridges
- (39:18) What Scott’s currently working on
- (41:17) Scott’s hope for the next 12 months
- (45:03) An influential communicator Scott looks up to today
Valuable Insights and Key Topics
- In most cases, base salary trumps stock options. Your salary is tangible money you can spend, grow and turn into more money; stock options are hypothetical.
- Make sure you understand the specifics of your situation. For example, if you’re an account executive with a thousand shares, you will have to pay to exercise those when a liquidity event occurs. Meaning, you need that upfront cash or you lose everything. It’s important to do your research to understand what’s realistic for you at this stage of your career.
- Ask questions about your contract and compensation using a neutral tone and non-confrontational language. Try “Can you help me understand this?” instead of “Why am I only getting X shares?” The key is to maintain positive relationships when asking tricky questions.
Notable Quotes- “This is all a risk, this is all a gamble [and] it keeps your eyes open to the game being rigged. Who really is going to make the money here? Even if you're a VP, the disparity between a VP of sales and a co-founder is so massive, right? I've gone to startups before and it's the co-founder, a technical co-founder, a of couple engineers...I'm then hired as the VP of sales. I sell this sh*t for the first time. I start hiring people. I build it, grow it. I get 1% and you probably have 30%. Are you trying to tell me that you are 30 times more valuable than that VP of sales who made this f*cking engine go? I will die on that hill. That is not equitable or fair at all.” – Scott Leese (23:15)
Useful Resources
Ravi Rajani
- https://www.theravirajani.com/podcast
- https://www.linkedin.com/in/ravirajani/
Scott Leese
- https://scottleeseconsulting.com/
- https://www.linkedin.com/in/scottleese
- https://twitter.com/thescottleese
- https://www.patreon.com/thescottleese
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