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Don't you pay tax when you actually get the equity? How is it different to getting cash and then just buying the stock?

• tedsanders 7y ago
  It's different in that at Netflix the equity comes in the form of non-transferrable 10-year options which do not trade on any market. Furthermore, the option premium is estimated by Netflix at fixed at a constant value, rather than being set by a market. If it was straight stock, then yes it would be rather equivalent to getting cash and then buying stock right away.
  • repsilat 7y ago
    > If it was straight stock, then yes it would be rather equivalent to getting cash and then buying stock right away. I guess this is purely academic for Netflix, but one difference in other companies is that the grant is made ahead of time, and the stock price can rise or fall before it vests. If (say) you expect the stock to rise with the market, and you expect the market to rise at 7% a year, you might also expect your income from vesting stock to also rise at 7% per year over the vesting period (typically four years) regardless of any raises or promotions. I have heard of some companies adjusting subsequent grants based on changes in value of invested stock, though. I think policies there vary.