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It is in fact not the practice of most publicly traded companies to award equity outside the tech company, even to highly-compensated employees.

midasuni 5y ago
I don’t get a desire for stock - why would I want all my eggs in one basket. If my savings and my income are from the same company, and it does well, that’s great and I make a fortune But if it doesn’t do well, I lose my job and have nothing to fall back on. Surely it’s better to have a diverse portfolio?
- kevinventullo 5y ago
  One benefit is that stock is typically awarded in the form of a multi-year grant, where the number of shares is priced at the time the grant starts. So if the original grant says you get $X worth of stock per year for the next 4 years, and then the stock price goes up 40% in Year 1, you’re now effectively getting $1.4X worth of stock per year for the remaining 3 years.
  - notJim 5y ago
    To illustrate this, imagine at offer time, you're given $150k + $80k worth of stock over 4 years. That works out to $170k per year. Nice, but not even doctor money. The stock is currently $100/share, so that's 800 shares. Now imagine the stock 4xes (not unusual in tech). By year 4, you're making $230k, without having had to beg for a raise or anything. This is how people end up with ludicrous total comp in tech.
    - midasuni 5y ago
      But if the company goes down in value you’re screwed. Wouldn’t it be more sensible to buy options in your competitor and hedge your bets?
- jdavis703 5y ago
  The taxes on equity are substantially lower than on salary. Also equity compensation can be an order of magnitude higher than any market-based salary would ever be.
  - mercutio2 5y ago
    The taxes on RSUs at vesting are identical to taxes on other income. RSUs are equity. If you get stock options, there are (very limited) circumstances where those options have favorable taxation relative to income, but it’s a gamble, if you follow the strategies that might yield tax advantages.
e1g 5y ago
It's fairly common for execs (both in the US and EU), it's just framed as LTIs via phantom shares. Comparable to RSUs in philosophy, outcomes, and vesting schedules. Source: we sell software to run these programs.
ledbettj 5y ago
When I worked at Cisco years ago fresh out of college, they offered an Employee Stock Purchase Program -- you could put up to X$ towards purchasing Cisco stock over the quarter, and the stock was issued at the end of the quarter at min(start_price, end_price) * 0.85. I haven't worked at another large corporation since then but I thought that was fairly generous and I still have quite a bit of CSCO from that program.
kasey_junk 5y ago
Almost 50% of the s&p 500 offer ESPP and ~40% of the Russel 3000 do[0]. Given that, 401k stock contributions, ESOP & RSU I think we are right at the line of “expecting” equity as part of your comp for most public companies. It’s close enough that we can presume it’s a standard benefit anyway. [0] https://rewards.aon.com/en-us/insights/articles/2020/how-common-are-employee-stock-purchase-plans-it-varies-widely-by-demographics https://rewards.aon.com/en-us/insights/articles/2020/how-com...

midasuni 5y ago

I don’t get a desire for stock - why would I want all my eggs in one basket. If my savings and my income are from the same company, and it does well, that’s great and I make a fortune But if it doesn’t do well, I lose my job and have nothing to fall back on. Surely it’s better to have a diverse portfolio?

kevinventullo 5y ago
One benefit is that stock is typically awarded in the form of a multi-year grant, where the number of shares is priced at the time the grant starts. So if the original grant says you get $X worth of stock per year for the next 4 years, and then the stock price goes up 40% in Year 1, you’re now effectively getting $1.4X worth of stock per year for the remaining 3 years.
- notJim 5y ago
  To illustrate this, imagine at offer time, you're given $150k + $80k worth of stock over 4 years. That works out to $170k per year. Nice, but not even doctor money. The stock is currently $100/share, so that's 800 shares. Now imagine the stock 4xes (not unusual in tech). By year 4, you're making $230k, without having had to beg for a raise or anything. This is how people end up with ludicrous total comp in tech.
  - midasuni 5y ago
    But if the company goes down in value you’re screwed. Wouldn’t it be more sensible to buy options in your competitor and hedge your bets?
jdavis703 5y ago
The taxes on equity are substantially lower than on salary. Also equity compensation can be an order of magnitude higher than any market-based salary would ever be.
- mercutio2 5y ago
  The taxes on RSUs at vesting are identical to taxes on other income. RSUs are equity. If you get stock options, there are (very limited) circumstances where those options have favorable taxation relative to income, but it’s a gamble, if you follow the strategies that might yield tax advantages.

e1g 5y ago

It's fairly common for execs (both in the US and EU), it's just framed as LTIs via phantom shares. Comparable to RSUs in philosophy, outcomes, and vesting schedules. Source: we sell software to run these programs.

ledbettj 5y ago

When I worked at Cisco years ago fresh out of college, they offered an Employee Stock Purchase Program -- you could put up to X$ towards purchasing Cisco stock over the quarter, and the stock was issued at the end of the quarter at min(start_price, end_price) * 0.85. I haven't worked at another large corporation since then but I thought that was fairly generous and I still have quite a bit of CSCO from that program.

kasey_junk 5y ago

Almost 50% of the s&p 500 offer ESPP and ~40% of the Russel 3000 do[0]. Given that, 401k stock contributions, ESOP & RSU I think we are right at the line of “expecting” equity as part of your comp for most public companies. It’s close enough that we can presume it’s a standard benefit anyway. [0] https://rewards.aon.com/en-us/insights/articles/2020/how-common-are-employee-stock-purchase-plans-it-varies-widely-by-demographics https://rewards.aon.com/en-us/insights/articles/2020/how-com...