Lifestyles of the (Hopefully) Rich and (Possibly) Famous

Recently I learned about an expensive and beautiful home in Mercer Island, Washington, which is owned by Myer and Barbara Coval, scientists who struggled for years before making their fortune.

In some respects the Coval’s story resembles that of many young scientists: struggle, relocation, persistence, and eventual success. Myer Coval did the work that made their fortune while working nights in a borrowed lab. During the day he worked on a road crew for $5 an hour while Barbara sold vegetables and fruit out of their garage. Their material situation changed abruptly when Myer’s immunoglobulin G technology sold to Green Cross Corporation in Japan. They bought the house soon after.

I’m writing about employment benefits—what they are, how they work, what’s negotiable, and how to make the most use of them to improve your chances of long-term material success.

In this column my focus is on a much narrower topic that, nevertheless, is a key to future prosperity. I’m writing about employment benefits—what they are, how they work, what’s negotiable, and how to make the most use of them to improve your chances of long-term material success.

Cash compensation

Salary varies widely, depending on your education and experience, where you live and work, the kind of employer you work for, and many other parameters. It also depends on what you dare to ask for.

You’ve probably heard or read that you need to negotiate a good starting salary because your starting salary is the basis for all your future raises. That’s true, at least until you change employers—yet there’s only so much you can expect to achieve in a salary negotiation.

Most employers are constrained by the need to maintain equity among the salaries of employees with education and experience similar to yours. By negotiating well, you might be able to win a 5-8% increase over the original offer, perhaps even 10%. Larger increases are rare, and there’s always a risk that if you seek too much, it can make you seem out of touch or too focused on the rewards and not enough on the work required to get there.

As you negotiate, be aware that there can be large differences in pay among various industry sectors. On average, a person working in a large pharmaceutical company will earn more than a person doing similar work in a biotech company. A person working in the biotech company enjoys compensation 5-10% higher than a scientist doing similar work in an animal health or clinical diagnostics company. It’s similar in the not-for-profit sector, where elite universities and major research institutes offer better compensation than mid-level universities and local labs.


In some companies, annual bonuses are an important part of the compensation scheme. They come in a lot of different flavors, and they’re hard to write about because they are so unique to a specific employment environment. For an entry-level Ph.D. scientist at a large pharmaceutical or corporate employer, an annual bonus might be in the 12-18% range if the firm is doing well. In other companies, you may not see bonuses that large until you reach a certain job level—perhaps when you assume project or people leadership. As you rise within your company, bonuses can reach 25-30% of your annual salary, or even more.

Bonuses generally have two components: one part is linked to your accomplishments and the other depends on company profitability. If either of those pieces really beats expectations—if either you or the company have a gangbuster year—your bonus can become really significant. I know many people who have celebrated in February or March when last year’s bonus comes in at 40-50%.

Bonuses are nice, but they generally aren’t negotiable. There’s not much you can do to influence them other than hard, competent work.

401(k) programs

A 401(k) works like this: You decide how much you want to set aside each month toward your retirement, before taxes. Your employer will match whatever you set aside up to a certain limit. A larger company may match your contributions dollar for dollar up to, say, 6% of your salary. A smaller company might pay in to your retirement account half of what you set aside—again, up to a certain limit. A startup might provide a 401(k) that you can pay into, but no matching funds.

You’ll rarely find a better financial opportunity: What other investment guarantees an immediate 100% return? Always contribute at least as much as your employer will match. It often makes sense to contribute still more.

Stock options and restricted stock units

Stock options give you the right to buy stock in the company at a guaranteed price at the end of your vesting period. The idea is that, because the company and its value will grow, if you hang in there you’ll get a nice bonus by buying something that’s worth significantly more than you have to pay for it. Unfortunately, it often doesn’t turn out that way. Often, employees find that their options are “under water” when the time comes to convert them: The current stock price is below the option price. That nice hiring incentive evaporated before you could take advantage.

In place of stock options, companies are starting to offer restricted stock units. RSUs used to be exclusively an executive-suite phenomenon, but their use is spreading. RSUs are different from options in that they represent an actual share of stock with a value on it—not a mere option to buy at a certain price—and it’s yours after you’ve “vested.” The “vesting period” is usually 3 years for either options or RSUs.

Everyone’s tax situation is different, but if I had two otherwise equal job offers and one employer was offering restricted stock instead of stock options, that’s the offer I’d select. With RSUs, you’ll always end up with something, unless the company fails.

Vacation and company holidays

Time off from work may not be as important to your future as your ability to save tax-free for retirement, especially for the workaholics among us. But staying fresh is a key to performing well over the long haul, and performing well is, in turn, a key to long-term prosperity. I would argue that a good vacation helps you recharge your batteries and come back smarter and stronger—and, anyway, if you use the opportunity well, there’s nothing better for your lifestyle today than a truly relaxing paid vacation.

In the United States, an entry-level scientist might get 1-2 weeks of paid personal leave to start, along with six or eight paid holidays. As you move up the ladder, your vacation time improves, but in the United States we rarely get beyond 3-4 weeks of new vacation days per year. (Many companies and organizations allow you to carry over some of your unutilized vacation time to the following year.)

Many people are surprised to learn that vacation time usually is not a negotiable item. It strictly follows company policy. So don’t bother requesting an extra week off when negotiating a new position.

Discussing lifestyle with employers

It is necessary to discuss the salary and cash compensation, and some concessions from the company are possible. But many of the benefits companies offer are nonnegotiable. Don’t expect the company to change their bonus policy to suit you, or to offer you a higher matching maximum for your 401(k). It’s just not going to happen, and pressing on these issues just makes you seem clueless.

It’s just as useless—and far more damaging—to push for extra vacation time. That sends the wrong signal completely.

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