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Why RSUs over options? In CA, in particular, if you're at a rocketship, the tax benefits of early exercised options can be huge, whereas with RSUs you're payin
by aliston 8y ago
Why RSUs over options? In CA, in particular, if you're at a rocketship, the tax benefits of early exercised options can be huge, whereas with RSUs you're paying 30-40% to the government.
- dawhizkid 8y agoif you have the funds to early exercise, chances are you're joining a company that isn't yet a rocketship. and of course at that stage you can't make the same comparison with what you'd get at FB because your strike price is probably in the pennies and you're getting some small % of the overall company. Real world example: low to mid level engineers at Uber joining in 2014/2015 at this point have stock worth over $2m over 4 years if Uber successfully IPOs at $100b+. By that time, Uber was already at "scale", offering RSUs (options strike price would be so expensive that it would be a huge risk to exercise), and that $2m is almost definitely more than what you'd otherwise have received in the same amount of time working at Google or FB.
- jon-wood 8y agoOptions are often not worth the paper they’re printed on. For pre-IPO, pre-acquisition, companies there’s no real market for those options. You may well be able to get better tax rates on them, but only if you can actually sell them. Compare that to RSUs which you can exchange the day they vest for actual cash, with a minimum of fuss. For perspective here I, and everyone I know who have worked for startups as an employee, have never seen a single penny from stock options. Maybe one day I will, but I consider them to be nothing more than a potential pleasant surprise down the line.
- icedchai 8y agoPaper? You don't even get paper stock certificates these days. It's all electronic. At a previous company, I exercised my stock options when I left. This cost me about $4K. Two years later, I got $12K back... not a bad return, but certainly not the "potential for early retirement" I was told when I joined.
- dawhizkid 8y agoit's just a colloquialism...
- icedchai 8y agoSorry, I forgot the /s! Still, you used to actually get real paper stock when you exercised.
- rhizome 8y agoRecently I was going through my father's papers and found a stock certificate for IBM, I think from the 60s or 70s. I think I'm going to frame it.