Right, but that doesn't include the extremely valuable equity grants given to engineers at these high-growth tech companies.
Facebook is certainly high growth. And even if you don't want to use the traditional Wallstreet "growth stock" measurement, try this one out: If you were a facebook engineer hired 1 year ago given a (relatively small) $100k RSU grant that vests over 4 years, that grant today is worth $285,000. And today, on your 1 year anniversary, your first 25% chunk would've vested, giving you $72k in pre-tax income. As somebody who experienced this recently in another "high growth" dotcom IPO, the term I'd use for that is "down payment on a house."
Among other things, if that employee had insisted on no equity all salary, he'd have POSSIBLY gotten that extra $25k a year. The guy next to him would be the one with $72k. You'd rather earn the "optimal" salary? And sure, share price can go down but if you don't believe a company is going to continue building wealth, why work there?
> And sure, share price can go down but if you don't believe a company is going to continue building wealth, why work there?
My point is simply that IMO FB employees are not being fairly compensated for the amount of risk they are taking. If my future employer is asking me to accept a salary pay-cut in exchange of RSUs, my upside needs to be more than that. If we are talking about a revolutionary company, then sure, I'd agree with you, but Facebook?
My take on this is pretty simple: There are very few labor markets I've heard of that are as liquid as software engineering talent in the bay area. If Facebook was paying below market rate salaries and trying to use their equity grants as justification, I think they would face a lot of difficulty recruiting top talent. Because the companies Facebook competes with ALSO have the equity card to play. And in fact, until recently, you could argue FB equity was not nearly as attractive as some of FB's major competitors. Specifically, they were underperforming publicly traded competitors like google, apple, linked in, and netflix, and they are at a disadvantage compared to non publicly traded companies simply because the potential upside is more limited. As an engineer you'd probably make more money in equity joining Twitter today than FB. Facebook's stock has plenty of room to grow, but to what? Possibly it will double in the next year, and triple in the next 5 years. Possibly. Compare that to the under-$20 strike price you'd get joining Twitter today and it's not as attractive.
All that said, I bought a few hundred shares of FB in the mid $20's and still see it as a good investment.