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I think the biggest gap that this guide and every one I've seen like it that they undersell the positive value for employees of the Restricted Stock Award (RSA)
by jaz46 7y ago
I think the biggest gap that this guide and every one I've seen like it that they undersell the positive value for employees of the Restricted Stock Award (RSA). RSAs can be significantly better than ISOs in many situations.
There is no actual reason why companies can only offer RSAs to founders and super early employees. The taxes get trickier once the strike price gets high enough, but employees should have the choice to maximize their equity value!
From the very beginning of founding my company and still 5 years later, we offer our employees the choice to take their stock as RSAs, options, or a combination of the two. We also teach a mandatory "Stock 101" course every quarter for new employees that is a 1.5hr version of this guide. Too many employees' (engineers in particular in my experience), don't actually understand how their equity compensation works and I think it's the responsibility of the company to educate them -- both for their current role and possible future job offers.
- choppaface 7y agoCan you offer any details on the tax consequences of offering ISOs versus restricted stock? While there has been a ton of discussion of tax consequences for employees, the corporate incentives are less clear and yet understanding them is probably key for progress here.