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There are a finite # of RSUs which management can distribute to high performers or valuable team members vested over a period of employment time. Here’s why I f

by mutaaf 7y ago

There are a finite # of RSUs which management can distribute to high performers or valuable team members vested over a period of employment time. Here’s why I feel like job security is oddly related, why would the organization want you tied to them for that vesting period if they did not value you or your efforts or want you there for that period?

username90 7y ago
Vesting period is meaningless, you get them as a part of a salary package. If I get shares vesting over 4 years then it just means that they are a part of my salary. If I leave after a year I didn't lose 3 years of shares, in the same way as I didn't lose 3 years of salary. The only time shares are different is stock growth, and since stock on average grows the shares will on average be worth more in year 4 than year 1. And in some rare cases with huge stock growth you can see extremely large compensations as a result, but otherwise they are just like normal salary.
- screye 7y ago
  Exactly. Almost I just view the amount that vests every year as a part of my annual salary and that's it. The total is really immaterial.
tracer4201 7y ago
I believe RSUs give your employer some friendly tax consequences. Aren’t they allowed to be written off? IMO people allocating RSUs are no safer than an engineer. They can easily get replaced. As a matter of fact, leadership can change directions at any time and now put you in a position where you’re miserable every day. I see the two have perhaps some correlation but because you’ve been given a decent grant doesn’t guarantee job security. Too many other factors involved.
- klipt 7y ago
  > RSUs give your employer some friendly tax consequences. Aren’t they allowed to be written off? Is this in any way different from deducting normal salary from profits?
uxp100 7y ago
Alternatively, RSUs are a way of giving you what feels a little like money now, but if they change their mind later they don't have to pay you. Why would they pay you at all if they did not value you? RSUs are worth less than equivalent cash, getting RSUs should signal less commitment than a cash bonus. To answer the original question, no, not worth loyalty, but no money is. You can think of them as a slightly complicated raise. That being said, over the past 10 years, RSUs have been very good for a lot of tech workers. They may or may not continue to be good.
mcfunk 7y ago
It is true that if employers are offering RSUs selectively, the assumption would be that they would offer them to people they wanted to incentivize not to leave the company until after the vesting period at the earliest. However, it offers no guarantee at all that the company would continue to desire the employee's loyalty or that the loyalty goes in the other direction in the first place, since as mentioned the company loses nothing but the employee if the employee is fired or leaves before the vesting period completes.
jiveturkey 7y ago
You've completely misunderstood vesting. It's not to keep you there for extra time. You can consider your base salary in terms of dollars per day, week, pay period, month, quarter, year, or FOUR YEARS. Any time span you like. Your RSU grant is simply scaled to four years instead of 1 year, or 1 month for that matter. The point of the RSUs vesting, instead of just being granted all at once, is that you are incentivized to put in a real effort. If your efforts help result in the company doing well, you get to share in the profit -- your $1 award today becomes $5 by the time it vests. The value of your RSU increased in direct correlation to the value that YOU ADD to the company. It gives you skin in the game and keeps people working hard. In fact, management is not incentivized to be stingy with some small "finite" number of RSUs. They are incentivized to hand them out liberally, giving everyone lots of reasons ($$$) to work hard hard hard.

by mutaaf 7y ago

username90 7y ago

Vesting period is meaningless, you get them as a part of a salary package. If I get shares vesting over 4 years then it just means that they are a part of my salary. If I leave after a year I didn't lose 3 years of shares, in the same way as I didn't lose 3 years of salary. The only time shares are different is stock growth, and since stock on average grows the shares will on average be worth more in year 4 than year 1. And in some rare cases with huge stock growth you can see extremely large compensations as a result, but otherwise they are just like normal salary.

screye 7y ago
Exactly. Almost I just view the amount that vests every year as a part of my annual salary and that's it. The total is really immaterial.

tracer4201 7y ago

I believe RSUs give your employer some friendly tax consequences. Aren’t they allowed to be written off? IMO people allocating RSUs are no safer than an engineer. They can easily get replaced. As a matter of fact, leadership can change directions at any time and now put you in a position where you’re miserable every day. I see the two have perhaps some correlation but because you’ve been given a decent grant doesn’t guarantee job security. Too many other factors involved.

klipt 7y ago
> RSUs give your employer some friendly tax consequences. Aren’t they allowed to be written off? Is this in any way different from deducting normal salary from profits?

uxp100 7y ago

Alternatively, RSUs are a way of giving you what feels a little like money now, but if they change their mind later they don't have to pay you. Why would they pay you at all if they did not value you? RSUs are worth less than equivalent cash, getting RSUs should signal less commitment than a cash bonus. To answer the original question, no, not worth loyalty, but no money is. You can think of them as a slightly complicated raise. That being said, over the past 10 years, RSUs have been very good for a lot of tech workers. They may or may not continue to be good.

mcfunk 7y ago

It is true that if employers are offering RSUs selectively, the assumption would be that they would offer them to people they wanted to incentivize not to leave the company until after the vesting period at the earliest. However, it offers no guarantee at all that the company would continue to desire the employee's loyalty or that the loyalty goes in the other direction in the first place, since as mentioned the company loses nothing but the employee if the employee is fired or leaves before the vesting period completes.

jiveturkey 7y ago

You've completely misunderstood vesting. It's not to keep you there for extra time. You can consider your base salary in terms of dollars per day, week, pay period, month, quarter, year, or FOUR YEARS. Any time span you like. Your RSU grant is simply scaled to four years instead of 1 year, or 1 month for that matter. The point of the RSUs vesting, instead of just being granted all at once, is that you are incentivized to put in a real effort. If your efforts help result in the company doing well, you get to share in the profit -- your $1 award today becomes $5 by the time it vests. The value of your RSU increased in direct correlation to the value that YOU ADD to the company. It gives you skin in the game and keeps people working hard. In fact, management is not incentivized to be stingy with some small "finite" number of RSUs. They are incentivized to hand them out liberally, giving everyone lots of reasons ($$$) to work hard hard hard.