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I've been saying for years that stock grants/options/RSUs are like playing the lotto, and salary/benefits are more important. They're also a tool to keep people

by Aloha 7y ago

I've been saying for years that stock grants/options/RSUs are like playing the lotto, and salary/benefits are more important. They're also a tool to keep people in roles they no longer want, because of a promise of a great payoff someday.

olliej 7y ago
Especially for companies that aren’t public yet so there’s no guarantee that you’ll be able to exercise ever, even if it does become profitable and worth real money.
- sokoloff 7y ago
  What prevents you from exercising options in the success case? You might not be able to sell the shares you receive, but you should be able to exercise and hold them. You might do this to manage tax exposure (to get the clock started on long term capital gains treatment and to make further gains capital rather than earned income).
  - haditab 7y ago
    Nothing prevents you, but keep in mind options are an option to buy at a strike price that is generally non-trivial. By exercising early you're basically doubling down.
  - redshirtrob 7y ago
    It's certainly possible. It's a complicated topic. There's a lot to consider and much of it relates to your personal risk appetite and financial position. There can be very serious tax consequences if the spread between your strike price and the FMV is large enough. The IRS doesn't care that you can't sell shares to pay the taxes. They're still due that year. That said, you can probably do the math to stay outside AMT by limiting the number of shares you exercise. It's so hard to know whether or not to do that. I imagine a lot of employees felt pretty good about their WeWork options at the beginning of this year. I imagine. I don't know anyone there.
Pfhreak 7y ago
Grants and RSUs are just income. Especially at the big players where they vest predictably and you can immediately sell them. And, sure, I walked away from half a million in Amazon shares when I left, but it's not like any role I took wouldn't immediately set me up with the same or better pay scale.
mrep 7y ago
How are RSUs like playing the lotto if you work for one of the big 5 (GAFAM)? I work for one and my RSUs vest monthly and they are autosold so i get a USD based direct deposit each month. While it does very slightly, I wouldn't consider it the lotto.
- danek 7y ago
  They mean for a privately held company
- dickeytk 7y ago
  You were awarded them 1-4 years ago though. That's when the value mattered. To add to that, it's not like when you join a low-performing company you can just leave because you think you can get better value somewhere else. The cost of switching as an employee is very high. Obviously it's a bit less of a gamble than the lotto, but it's not like decisions that were made 30 days ago are being played now, it's much longer term than that.

by Aloha 7y ago

olliej 7y ago

Especially for companies that aren’t public yet so there’s no guarantee that you’ll be able to exercise ever, even if it does become profitable and worth real money.

sokoloff 7y ago
What prevents you from exercising options in the success case? You might not be able to sell the shares you receive, but you should be able to exercise and hold them. You might do this to manage tax exposure (to get the clock started on long term capital gains treatment and to make further gains capital rather than earned income).
- haditab 7y ago
  Nothing prevents you, but keep in mind options are an option to buy at a strike price that is generally non-trivial. By exercising early you're basically doubling down.
- redshirtrob 7y ago
  It's certainly possible. It's a complicated topic. There's a lot to consider and much of it relates to your personal risk appetite and financial position. There can be very serious tax consequences if the spread between your strike price and the FMV is large enough. The IRS doesn't care that you can't sell shares to pay the taxes. They're still due that year. That said, you can probably do the math to stay outside AMT by limiting the number of shares you exercise. It's so hard to know whether or not to do that. I imagine a lot of employees felt pretty good about their WeWork options at the beginning of this year. I imagine. I don't know anyone there.

Pfhreak 7y ago

Grants and RSUs are just income. Especially at the big players where they vest predictably and you can immediately sell them. And, sure, I walked away from half a million in Amazon shares when I left, but it's not like any role I took wouldn't immediately set me up with the same or better pay scale.

mrep 7y ago

How are RSUs like playing the lotto if you work for one of the big 5 (GAFAM)? I work for one and my RSUs vest monthly and they are autosold so i get a USD based direct deposit each month. While it does very slightly, I wouldn't consider it the lotto.

danek 7y ago
They mean for a privately held company
dickeytk 7y ago
You were awarded them 1-4 years ago though. That's when the value mattered. To add to that, it's not like when you join a low-performing company you can just leave because you think you can get better value somewhere else. The cost of switching as an employee is very high. Obviously it's a bit less of a gamble than the lotto, but it's not like decisions that were made 30 days ago are being played now, it's much longer term than that.