6 ms·
Ask HN: Am I getting screwed? RSUs in dollars vs shares
I've got an offer for employment from a startup that is issuing restricted stock units in a dollar amount. From the research I've done, they can be expressed in a dollar amount or number of shares with a price. Unless I'm misunderstanding something, accepting dollars vs shares+price seems like an easy way to screw over your employees. Let me illustrate with an example:
Scenario 1:
$10,000 in RSU that vests over 4 years.
At the end of 4 years, I'll have benefitted $10k regardless of how well the company does (assuming it has IPO'ed)
Scenario 2:
1,000 shares of RSUs priced at $10/share that vests over 4 years.
At the end of 4 years I'll have 1,000 shares of public stock regardless of the price (whether it is a penny stock or something like $50/share). Assuming it is $50/share in 4 years, thats $50k (don't know how the original share price works into this formula).
What am I missing? It seems like RSUs in dollar amounts are a bust (almost identical to the cash equivalent) and not tied to how well the company does post-IPO (don't care about the tax implications, I'm sure thats a whole nother topic).
Can anyone shed some light on the dollars vs shares RSU scenarios?
- epc 15y agoScenario 3: the startup hasn't done a 409a pricing of its stock yet. They're committing $10k of RSUs at whatever the valuation ends up being. If it’s $10/share then you receive 1000 RSUs. If it’s $5/share, then it’s 2000 RSUs. If $100/share, then 100 RSUs. You need to find out if they're literally granting $10,000 in stock to you, or if they’re waiting for a valuation and until then literally don’t know the number of shares. A dollar amount is not all that unusual…I received a grant equal to 25% of my income vesting over three years from an already public company. That is, they calculated the number of shares equal to 25% of my then income. That didn’t seem to be a lot but the stock split twice during the vesting period (this was in the 1990s) and ended up being a nice sum.
- epc 15y agoAlso: you need to find out what the tax implications are of RSUs. If it’s considered to be $2500 in income each year you may end up paying tax on that even though the RSUs are not liquid, and will only have value if the company has a liquidation event.
- rsursu 15y agoTnx...much appreciated.