When we were negotiating my pay package upon hire as a Senior Manager, my recruiter asked me to put together a list of all sources of income (base pay, incentive pay, performance pay, stock, etc). In order to match my previous salary, he put together a pay package which included a base salary based on “24 months at level” which means my pay matched that of a Senior Manager who had been doing this job for two years. In addition, I was offered approximately 10% potential upside based on my performance appraisal as well as a 2-5% bonus based on overall company performance (profit sharing).
If you are hired as a Senior Manager, you will also get an RSU award equal to approximately 30% of your annual pay (payable over 3 years so it is really a 10% bonus per year). If the stock does well, this number can quickly increase. You may also get a signing bonus equal to 20-30% of your annual pay (but you should amortize it over 3 years to align with your RSU award).
The signing bonus is treated like regular income so a huge portion is taken out for taxes. Incidentally, I did really well with RSUs since Accenture stock went up over 60% during my vesting period. But RSUs are also treated as income, not capital gains. So tax withholding can take about 40% of the total when you cash out.
Here’s something important you should be aware of. It caused me a lot of headaches last year. When you cash out your RSUs, Accenture doesn’t deduct taxes from your cash-out amount. Rather, they deduct shares to cover the taxes. For example, let’s say you are cashing out 100 shares and your tax rate is 30%. Accenture will cash out 70 shares for you and report the 30% taxes on your W2 as regular income. What happened with me is that UBS, the stock administrator, submitted a 1099 to the IRS suggesting that I cashed 70 shares without paying any tax.
Last summer, I was flagged for an audit by the Internal Revenue Service based on this discrepancy. My IRS auditor and I had to spend quite a few cycles figuring out what happened. We were able to reconcile it but the auditor recommended that I include a note with my tax return the next time this happens. Good advice.
THE DREADED LADDERING CALL
A major mitigating factor to your total compensation can be the dreaded Laddering Call. This is sometimes referred to as “Staff Rankings” by other companies. My new employer, Micrsooft, recently eliminated staff rankings because it was a major contributor to political gaming, misplaced priorities and overall employee dissatisfaction. Accenture has not indicated any interest in eliminating this performance appraisal process so…caveat emptor.
It goes something like this. If you are on a project for at least six weeks, your project supervisor will rank you against every other Sr Manager on that project during the year (the same process applies to all the other ranks as well). If you work on more than one project during the year, each project will rank you against your peers for that project. If you worked on a number of short term projects (fewer than six weeks each) during the year, you need to make sure that your Career Counselor understands, and can defend on your behalf, why you don’t have staff rankings to fill the previous performance year’s calendar. Or…just make sure you get on some longer term projects during the year. It will make life easier for you.