September 29, 2020

Evaluating/Negotiating a Job Offer

In Financial Planning, Tax Planning, Wealth Strategy

Vince Lee
Contributions from: Vince Lee, CFP®, CPA

September 29, 2020

COVID-19 and the economic downturn have many out of work and looking for new positions.  A job search can be competitive and confusing, especially if you haven’t looked for a job in a while.  Companies in sectors that have been weathering the current economic storm well are still hiring, although the interview process may look very different.  If you are currently in a job search, everything can feel mystifying and intimidating based on the new technology paradigm.

If the interview and recruiting  process has changed dramatically, what happens when you get the offer?  These days, even the simple task of accepting an offer at a new company has added complexities.  What should you be asking for?  Is this job purely for the paycheck, or do you want a piece of the pie that would give you a vested interest in the company’s success?  What about benefits?  With many corporations, the breadth of non-monetary benefits above and beyond health and dental care are so numerous that the outlines and descriptions can fill an employee handbook.  How does one negotiate the best possible deal while still walking away from the discussions with a positive relationship between the candidate and the future employer intact?

Know your worth.

There’s probably a salary baseline you’re working from as it pertains to your compensation.  It might be what you perceive is fair, or perhaps it’s comparable to what received at your previous position – but different companies pay very differently, especially if you are moving into a different industry.  There are many angles from which to look at compensation.  As a finance professional, hypothetically speaking of course, if I were to move positions, I might be eligible to receive compensation from my new employer if I brought a book of business – my already established clients – over to my new company.  There are many sales positions where the book of business moves with the sales rep, and that can be used as leverage when negotiating the new job.

For non-sales, salaried folks, there are resources online that have taken the guesswork out of compensation.  Many websites, like and, have compensation ranges for myriad positions in a variety of fields, all self-reported and aggregated in fairly easy to use interfaces.  There you can vet the salary offering against industry standards and leverage these to negotiate a better package overall.  Making sure your salary is competitive and fair is an important step in the process.

Knowing how you will be evaluated can also directly affect your compensation over the long term.  Make sure you understand what the review process is – how often you will have a performance review and when those performance reviews become the basis of a raise, bonus and/or promotion.  Having a clear understanding of how you will be evaluated will enable you to self-monitor between reviews, to have a good idea of how your performance will be graded and rewarded.  This will give you a clear view of things that are both in and out of your control in your new job and take away the fear that can be generated around being judged on how well you are doing – you will already know!

Taking stock.

Base pay, bonuses, and raises are great places to start with the job offer negotiations, but they’re not everything.  Stock option compensation has become an industry standard in the technology sector, and in fact that company-ownership piece is now being utilized by many outside the tech industry as well.  There are two paths to stock ownership:  restricted stock awards and non-qualified stock options.  Let’s look at these two powerful benefits.

Restricted stock units (RSUs) are grants that are awarded or issued to employees through a vesting plan.  The vesting plan can vary by company or vary through negotiations prior to accepting a position.  After the vesting period is satisfied, the employee receives the stock shares.  The vested shares are treated as ordinary income based on the fair market value of the shares (read:  these are taxable).  After accounting for withholding and payroll taxes, the employee may sell or keep the shares as desired.

Non-qualified stock options allow employees to purchase the company stock at a previously negotiated unit price over a certain amount of time.  For non-qualified stock options, the difference between the value of the stock and the agreed upon purchase price at the time of execution (or exercise) is treated as ordinary income.

Companies like to award stock options as RSUs or non-qualified stock options as it incentivizes employees to work hard and do well.  They have skin in the game, as it were, with ownership of part of the company.  And in the case of many technology IPOs or positive stock runs, these options can create millionaires overnight, infusing wealth into the entire employee base.  Thus, this can be a critical part of an employee package.

Death and Taxes.

Tax mitigation and efficiency has always been a large part of any well-managed estate plan.  There are ways in which an employee can work with the current tax structure to benefit over the long-term and toward retirement.  One way would be a traditional 401(k) or Roth IRA plan.  Knowing the benefits around these tax deferred accounts can help you save over the short-term, as well as build a great nest egg.  I’ve heard contribution matching programs referred to as free money – if your employer offers a matching contribution towards your retirement savings plans, you want to make sure you’re maxing out your savings so that the company’s contribution is also the max.  A matching contribution is a percent the company is willing to match of an employee’s contribution.  For example, if you contributed 5% of your salary to your retirement plan and the company’s matching is up to 4%, they will put another 4% into your retirement plan.  If your contribution was 2% of your salary, then the company would only put in 2% more.  If the company has a matching 401k contribution and you are not saving for your retirement, then you are “leaving money on the table.”

Another tax efficiency benefit is when a company offers employees the ability to defer compensation.  This is when employees set aside funds for their retirement plans, but the money is instead withheld by the company until a later date.  It’s like hedging a bet on the employer; they defer paying the employee a portion of their salary or bonus, or both, until a later date, and the employee holds an IOU with the company.  That said, this is not without risk.  If the company goes into bankruptcy, the employee is at risk for never recovering that deferred income.  However, if there is a change of tax bracket for the employee, it may be a risk worth taking as the savings in taxable income can be significant.

On the side of health care and death, it’s important to understand the health benefits offered, along with any life insurance or additional bonus options the employer has on the table.  Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA), where employees can leverage pre-tax money towards health care expenditures, are popular benefits packages and can help buoy your bottom line.  Often larger companies will offer life insurance for top executives, helping offset the cost of the policy.  Other work-life balance offerings that an employee may want to negotiate are paid time off, sabbaticals, flexible work schedules, and the ability to work from home.

Devil’s in the Details.

There are a few other creative benefits out there that prospective employees can examine.  One is around paying it forward:  matching philanthropic gifts.  Often companies, such as Microsoft, Amazon, Google, and the Gates Foundation to name a few, want to encourage philanthropy and volunteerism in the communities in which they operate.  One way to entice employees is by offering paid volunteer days.  Another, more common, offering is matched donations to nonprofits where employees give.  This encourages outreach into the community at large, while promoting good within the employee base as well.

Another out of the box idea would be reimbursement or payment for continuing education for the workforce.  Ensuring that employees are up-to-date on the latest thinking in their fields helps employers increase institutional knowledge while encouraging their employees to expand their horizons.  It’s cheaper and easier to retain the workforce than to train new recruits, and offering continuing education is a great way to foster retention rates.

Ask, and Ye Shall Receive.

Never be afraid to ask.  Each company is different on what they are willing to negotiate, so engaging in a respectful conversation around negotiable and non-negotiable benefits helps both you and the employer.  Generally, a large company will have less flexibility on what they can and cannot offer.  A smaller company, however, may have more flexibility and will also be looking for new innovations that are inexpensive to employ, but that add great benefits to entice workers away from larger employers.  For example, a large company may have flexibility with compensation for an employee that doesn’t need medical benefits, while a small company may not budge on that issue.  A small company may be flexible on additional paid time off while a large company may not be able to accommodate additional PTO.  And since we know you were hired for your critical thinking, creative problem solving, and great communication skill-set, asking about alternative benefits with both large and small companies will help them get better at hiring sought-after employees and retaining the great ones as well.

Negotiating a new employee package can seem daunting and off-putting, but with proper foresight and information, the negotiations can make you a better employee and your company a better employer.  Keeping the discussion respectful, going in with knowledge of your personal worth, and being able to articulate creative ideas that the hiring manager or human resources department can implement easily while providing value will also set you on a path to super-star employee even prior to signing on the dotted line.  Happy negotiations and congratulations on your new position!

Vince Lee, CFP®, CPA, PFS | Relationship Manager & Wealth Planner
Vince can be contacted at (425) 283-1601,,

Disclaimer: Certified Financial Planner Board of Standards Inc. owns the certification marks CFP® and Certified Financial Planner™ in the U.S

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