Compensation Conundrum

Straight Answers to Real Questions

Question:  I took a pretty big drop in base salary a few years ago in order to join a high-tech start-up as their CFO. My compensation is heavily weighted towards incentives tied to company performance – base salary, plus variable pay up to 100% of salary, plus stock options.

Unfortunately, the company hasn’t had the success we’d hoped for and the management team is just drawing base salaries, which in my case is $130,000. I’ve decided to make a move and have been looking at positions paying around $200,000 plus a bonus (which will get me back to where I should be). I’m afraid of being low-balled if and when I get to the offer stage. How do I handle the question of compensation expectations?

Answer: At your level, there shouldn’t be much chance of actually being low-balled. Any company that tries to get away with an egregiously low offer is not a company you want to work for anyway. That being said, it’s part of the negotiation process for each party to try to strike the best deal they can. Position postings usually refer to a salary range and because you’re currently well below market, some prospective employers may assume that they can get by with an offer in a very low part of the range.

However, the salary range of any position is not a function of what the candidate was earning before, it’s a function of how qualified they are for the job. For example, if you’re moderately qualified, maybe the low end of the range is fair. If you’re well qualified, you should be in the middle to upper-middle end of the pay scale. And if you’re dead-solid perfect, they should be testing the upper limits of the range.

Be frank about the circumstances leading to your current compensation and be up front about what you expect to earn with your next job. Whatever you do, don’t equivocate about what you think your market value is. If you don’t set an appropriate price on your services, the odds are that a prospective employer won’t either.