…only works in your favor if you are at your firm long enough to collect on it. Will you be? Think about it:
~Maybe 5%-10% of people stay 10+ years [unless you are brought in as CEO and it doesn’t matter] at any company in 2009.
~All companies KNOW this. Not hard to figure out.
~They also know that you can be laid off, or let go if you don’t survive your way up the ranks, etc…if you even stay that long.
~Either way, the loser in both cases, would be YOU. Happens every day of the week, I’m afraid.
~But yet they still “offer” Deferred Comp, 401k Vesting, Warrants, etc, as an enticement for you to join them.
Do you really think this is genuine, to offer Long-Term/Deferred Comp, knowing this? Knowing that so very few will ever realize the benefits being offered? Think so? Maybe yes, maybe no.
Think hard on this, in many cases I would say. There are no stat’s on such a subject I am aware of, but it is safe to say that there ARE companies that make such calculations from above, in their favor. If they can benefit from your effort & toil, then you leave for whatever reason after 3, 5 or 9 years, whatever they offered is recouped more or less as a ‘Profit Center’, essentially. Or some similar, more careful wording.
True, there are many companies that consciously believe in ‘Retention’ of their best employees. But does that translate actually, for you, 5-10 years out? By then, you make more money, older, etc. As you rise in the ranks, there are less places at the table.
All of a sudden..’Retention’ may not mean the same thing it did, in practicality’s sake…which is to say, YOUR sake. Worse, the better intentions of the good companies out there that genuinely offer this type of Comp, may have CHANGED in the years since you arrived [through staff changes, buyout of the company, etc], meaning that you are still affected, even if you made the correct choice initially. You arrive then in a tough spot.
The point of all of this is not be dour. But if you are not aware of this, and thinking about it, you cannot adjust as you go.
What to be done? Not much, except be aware, be fluid & open to change, and adapt. Or start your own wildly successful company. Heck, I love being offered 50,000 shares to join a Startup as much as anyone else, so it does not thrill me to ponder such a subject. But the reality is there. Of course on balance, to be fair, there are many people that DO manage to benefit from these offerings. Good for them.
And then, of course, there are those lucky souls that arrive at a place called Google, or Yahoo in 1998, or Microsoft in 1985, and collect their millions. Good for them, too.
For the rest of us, be aware & know that your financial future needs to rest with YOU, planning included. Best, K. Arthur