4 ms·

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 gre

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.

4 ms·

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 gre

by midasuni 5y ago

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.