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The author repeatedly mentions $XXX RSUs. It's been a while since I've worked for a pre-IPO company. Is it common for companies to give RSUs a dollar value in
by kbob 10y ago
The author repeatedly mentions $XXX RSUs.
It's been a while since I've worked for a pre-IPO company. Is it common for companies to give RSUs a dollar value instead of a number of shares and "heck if I know the valuation"? And how are RSUs different from straight ISOs?
- rawnlq 10y agoTypically they also tell you the Fair Market Value of the shares and you just multiply by the number of shares offered. They aren't options and you just get them whenever the company goes public. But they are completely illiquid before then. https://en.wikipedia.org/wiki/Fair_market_value https://en.wikipedia.org/wiki/Fair_market_value Quoting them in dollars is probably not too wrong if you believe the company's valuation won't change much (which is probably true for these unicorns). Even groupon's valuation didn't drop more than one order of magnitude.
- hkmurakami 10y ago>They aren't options and you just get them whenever the company goes public. But they are completely illiquid before then. Many companies now have a buyback mechanism where the employer will buy back your RSUs at a pre-determined price (often the price per share in the last priced round). Although the vesting schedule is the same as if it were options, the contracts often have a clause where technically the RSUs have not vested, in order to avoid capital gains taxes on a (fairly) illiquid asset.
- sjg007 10y agoYeah, he will pay taxes on the vested illiquid RSUs on top of his 130k.
- marme 10y agothey have a value because the IRS requires the company to value the shares at fair market value and you pay tax on that value as regular income at the end of the year