I'm always curious .. how do these execs negotiate such contracts (where contingencies like getting acquired/fired lead to a payoff). Does this start at the VP or EVP level? I assume there are professionals/lawyers involved in the contract part (representing the exec I mean)?

Smaller orgs VP level. Larger EVP. You almost always retain a lawyer to review these things. Change in control is a very common trigger for a lot of things in most employment contracts of this nature. The downside is you end up with much more ironclad covenants and restrictions. But your comp is often at a FU level if you do get fired so it balances most of the time.

I'd recommend reading "Barbarians at the gate". It will give you a very good idea.

When it comes to levels, those kind of golden parachutes are offered only at top levels. VPs, SVPs, etc. are help and get normal packages when they leave, at least in normal, large blue chip companies.

It's simple.

You say "this company turns over 20 billion a year revenue. If I want to I can flush the whole damn lot down the toilet."

"Pay me to not do a shit job."

Latest in executive compensation research. As advocated by expensive consultancies.

I think some CEOs actually do that. For example the CEO of Boeing certainly decided to flush the thing down the toilet.

Hindsight is always 20/20

You might enjoy reading the book "Pay without Performance: The Unfulfilled Promise of Executive Compensation" [1]

TLDR: Companies don't engage in arms-length negotiation with CEOs. Shareholders don't hold companies to account for various structural reasons.

[1] http://www.pay-without-performance.com/

I've only seen it at the CSuite (and occasionally key SVP levels).... almost always if you're brought in from the outside.

> $42 million

I would be happy enough right now with an extra $420,000!

That would be nice

Not if your one desire is to run large corporations and you're easily bored.

I'd consider myself easily bored, but I think $42 million would give me plenty of novel ways to entertain myself. (I definitely would _not_ want to run a large corporation though, so I guess it's a good thing I'd never get hired for one of these jobs anyways)

Hell, even if you managed a year or two, you’re still walking away with tens of millions that’s pretty close to financial security for the rest of your life.

Tens of millions is only "pretty close to financial security". Wow.

I think there's a part of the HN population that has delusions of becoming billionaires one day, so they talk about tens of millions like it's not much. They'll likely never have either.

Financial security in the Bay Area requires a house there ($2-3M, nowadays) plus $COST_OF_LIVING/4%. This is easily $5M net worth. It's in "two Googlers and a successful exit at some point earlier" territory.

Granted, this threshold is less than $10M, but it isn't orders of magnitude less

All of which is to say that it is basically impossible to stay in the Bay long-term unless you make an absolute fuckton of money.

Well, you do have two other options.

One is to commute in 2hr or more every day. Which a lot of service workers have to do.

The other is to share a house or apartment with roommates (if you're single) or with another family (surprisingly common, because what else can you do?).

These are both lifestyle decisions that differ substantially from what most people think of as "normal", past your 20s.

What I'm saying is, merely living a "normal middle class" lifestyle in the Bay requires absurd money. So I can understand why people act like absurd money is normal.

You don't have to live in the Bay Area. You don't have to commute since they were talking about retiring with $42 millions.

Fair. Anybody with $42M has it made, anywhere.

You don't need $5M to be "safe" in the Bay Area. You do need some money - enough to afford to get a mortgage on a place to stay - but once you get past that, things get easier. The thing is, it takes money to start making money. It takes money to start to be able to afford the things that will make your cost of living go down. It does suck, but it's not $5M.

I used to work in car sales in the bay area. Basically every car salesman and every mechanic at a franchise car dealership owns a home. Maybe they drive 30-75 minutes to work, but they are 25-35 and own a home in California. The older ones own a home within 15 minutes of their job.

That they bought themselves? What's the cheapest home available within an Hour of SF, 500k or more? Do you really think a car salesman barely pushing 100k a year can swing that? Or are you implying that car salesman in the Bay are making top 1% salaries?

I wasn't talking about car salesman that work in SF proper. Yes, 1 hour from there is basically still pretty expensive. But if you can work anywhere 30 minutes outside SF, and then live another 45 further, you own a home. And yes any decent car salesperson is making $100k. I made on average $250k but I was a bit better than top 1%, and I know a few that made more. I suppose you could say I only socialize with high performers. Sure every car dealer also has a few people that struggle to pay their apartment rent. The industry is setup for an good salesperson to support a family. If you can outperform average by 2x, which is possible if you're really on it, you can make 2x+ that amount. Same applies to mechanics that are good at their craft.

If you put $5M in index funds, you’d grow it by about $400k a year (8%) on average, to start. It’s hard to imagine going broke with that by doing “normal middle class” things. For added security, one could add in a part-time job.

8% is extremely optimistic. 4% is more like it, maybe even 3.5%. I'll use 4% for what follows. That's $200k. Take out 20% LTCG, now you're at $160k.

Rent is like $3k/mo, so $36k/yr. Say you have modest living expenses of another $34k/yr. Now you're at $70k/yr to break even. That leaves you with $90k to save/compound.

So, ok, you're doing very well as a renter with $5M invested, even in the Bay Area. And, given that you have more than twice the income you need, you'd probably be ok with only $2-2.5M. As in, breaking even with passive income.

Which would work so long as you don't want to own a house, and so long as markets don't melt down. That extra security seems to cost extra.

9% is the long term annual return of the stock market over the past century.

Sure, but if you retired in 1997 to live off the interest on an investment in the S&P 500, by 2008 you'd have made an annual return of... 0%.

If you used cromd's figures of $5M in funds and lifestyle expenses of $400k/year you'd have spent ~80% of the principal (although you'd probably have reigned in your spending unless you were mad)

A boat doesn't just need to survive the harbour's average water level - it needs to survive low tide and high tide.

4% is the historical number you could take out for expenses in the worst case scenario. IMO it’s not pricing in modern existential threats, such as a war that crosses the ocean, or existing regulatory differences that make it more difficult for larger firms.

Yeah, maybe 4% is all one could manage to withdraw to survive the longest downturns. I haven't dug into that much. But, people are maybe debating different things - some are likely talking complete early retirement whereas my comment was more about "financial security" (or at least the claim it's "basically impossible to stay in the Bay long-term unless you make an absolute fuckton of money").

For me, financial security means something more like: money will be low on my list of problems. I could get more money by turning my attention there. I might have to work, but it could be some low-stress job, and losing it isn't a big deal. I could afford extra care for an elderly parent. I won't be knocked out by most random things that pop up, specific to my personal life, though I can't control what happens to my country etc.

For some, it means they don't have to work at all, and can't be ruined by market downturns that last decades. And further for some others, it means they can survive wars and societal collapse.

I think both are valid to wish for, though at a certain point it's a burden on yourself to control things you can't control. If there's a 1.1% chance of widespread nuclear war in our lifetime, and you want to be 99% certain your lifestyle won't take a hit, one needs to save and spend a ton to be able to weather it all.

financial security is subjective.

Come on, do some math on this. Any engineer at FAANG, even excluding their stock grants, will probably have close to 10M in retirement accounts by the time they retire given max contributions and historical returns.

Oh I agree 100%, personally it’s more money than I’d know what to do with, but I’m also aware that there’s a chunk of users here who’s respond with “well after tax this that, etc etc” with some justification as to why it’s not quite enough, so I thought I’d attempt to cover all bases hahaha.

only on HN

Most people spend proportionally to what they earn, so I don't see why one year salary should necessarily provide the lifetime of financial security, regardless of what that salary is.

There comes a point where it becomes increasingly difficult to "spend what you earn." I mean, you can do it with dedicated effort, of course, but even if you're very in-the-bubble, it's hard to think of buying ultra-expensive commodities (boats, art, highly expensive cars), or your third or fourth house, or other things that can plausibly eat up tens of millions of dollars in a year, in the same category as, like, "Well of course I want to send my children to a swanky private school instead of public."

There comes a point where people start buying things like Twitter.

That’s a trap though. It’s far more sensible for most people to live well below their means and create options for their future.

I've stated what I've observed and experienced. Whether it's a "trap" or "sensible" is irrelevant.

Depends on the people. If you want to be safe to retire early, it is a good idea to keep living humbly while you are making a lot of mone and not adopt the Jet Set life.

I've seen example of people selling their company, retiring early and stay low-mid budget. One particular example is very wealthy but live in a small house, drive a 10y old compact hatchback car. You wouldn't know his fortune just by looking at his habits. He enjoy more a BBQ with his neighbors than going to expensive places to eat and help around when someone in the village needs an additional hand. He is still probably spending a lot more than I do traveling on holidays and he has nicer furnitures but he is still doing it like most people do, only a few weeks a year when the kids are out of school. What he has is the ability to justify buying expensive but sturdy stuff that last, instead of things that break and have to be replaced on a regular basis.

Fair point.

But it’s a bit ridiculous to get 42 million USD and not be satisfied. And the original comment is ridiculous to suggest that it’s not sufficient compensation.

If your salary was $25k/year (a respectable amount for the majority of world population), would $1M seem like a lifetime financial stability? I think so. Yet if your salary is $250k/year, it probably wouldn't, and this would sound ridiculous to people who make $25k/year.

If you make 25k/year getting 1M is almost as good as getting 42M, because you are not used to thinking about anything you can do with 42M that you can't do with 1M. However, if your salary has been 10M/year, you most likely can easily see many ways to spend 42M, which are not something you think about often when you make 250k/year.

Does this make sense?

Most people on $250k are just trying to “survive” (as in, have a house and a family) in a high cost-of-living area. If a house costs $2M then $250k is only just sufficient after deducting taxes and living expenses. Their spending is not so different from someone earning $25k in a low cost-of-living area.

There’s nowhere in the world where the cost of living requires $10M/year. To spend that much money you are forced to spend it on high-end luxuries. Of course there are people who could easily consume that amount of money, but most people on that income would put it into investment instead of consumption.

Financial freedom is supposed to cover more than just some standard "cost of living" in a given area. It should let you maintain your lifestyle without having to work for it. Maintaining the lifestyle includes keeping your spending habits, so if you have been spending 10M/year, then achieving financial freedom would mean you can keep spending that much for the rest of your life.

It's a different question how many people actually spend 10M/year - I have no data about that, but I can easily see myself spending that much if my income has been 40M/year for several years. To me personally spending that money would not necessarily mean buying some high-end luxuries. It would probably involve trying to make some changes in the world and influence things. But yes, luxuries and interesting experiences too. If you're interested in this question, try finding more information about lives of famous rich people.

Like lossing it all day trading XD

My one desire is to be financially independent. We don't all get what we want.

With 42 million, he's fine. Time to care about someone else.

not almost nothing. He's a bit of a tackling dummy at this point. That being said, he's the world's best paid tackling dummy. Even if Musk purchase does not go through, not sure how he stays as the board basically said when they agreed to Musk's offer we have no current plans to create anywhere near the value Musk says he can.

Sign me up.

See my previous comments

What fucking sinful country i live in

$42 million is a pittance for a man at his level. VCs with a tenth of the risk have taken home more money than that over the years from several deals. He has also been at the company for a very long time. I’d be enraged at a $42 million exit when I’m a child prodigy who has worked his ass off to finally helm one of the most publicly visibly corporations on the planet.

Huh, it's just a job even at position of CEO. To think he has taken risk while doing his well paid job is freaking hilarious. He did not build the company,nor is he some A level tech celebrity. So 42 million is BIG FUCKING DEAL.

Yeah I was like, wtf is GP talking about this guy is an employee who climbed from SEng to 42m exit in a decade. At no point was he even remotely close to missing a credit card payment; what a sweet deal he's set for life now.

Where are you pulling “he did not build the company” from? Anyone below the executive class is riskless and contributed nothing to the company?

Most child prodigies and most people that work their ass off don't become millionaires, much less ones that can earn a million a year from interest. Also he did receive compensation for all the years he worked, no?

Why are you being intentionally dense? Compensation in the valley comes in the form of stock options more than anything else. This is like saying someone slightly less consequential to google than Jeff dean or Sanjay ghemawat should be happy with $50 million for giving a large portion of their lives to the company. Are you guys smoking something?

Most child prodigies don’t even work in corporate America and a lot of them don’t care for wealth. They’d rather go into theoretical physics or pure math.

No human being needs $42 million for anything, let alone more. I'm sure he'll be fine.

Oh I didn’t know the antiwork idiots from Reddit had found their way here. That’s my bad. I should’ve realized.

The initial ideal of capitalism is, the people who make good decisions capitalize more “decision power” (=money) because it will be good for the future economy to concentrate power in their hands. Those who hold power are the best ones.

It’s just a fun theoretical thought exercise, in which there’s no limit to how much one would accumulate, if their decision making is good to the infinite. He didn’t tank Twitter into the ground, therefore he deserves a good share. In practice, they use this money for themselves instead of reinvesting it into other endeavours.

You need more than that if you want to set up a steelworks or a silicon fab. I understand that you probably mean no human being needs $42 million in pocket money to spend on gigantic houses and medium-sized yachts, but c'mon.

Yeah but he’s no Musk.

I wonder if he will leave Cali to avoid taxes?

Too late for that.