3 ms·

I don't think this is true: you can immediately convert your salary to non-cash. My understanding is that stock comp is usually thought of in dollar terms, so

• nostrademons 5y ago
  Not for new employees, but for existing employees. If you negotiated $200K in salary and $300K in stock and your company stock was $300/share when you joined, then upon the first board meeting after hire, you'd be granted 1000 shares/year (subject to vesting). If the stock then goes up to $1000/share, that compensation is worth $1M/year at the time it vests. You've basically gotten a raise because the stock price went up. I've heard some tech companies have very recently (2021) changed this so that you get a certain dollar amount each month and it converts to shares based on the price that month, probably to avoid unpredictable stock compensation expenses as the stock goes up. Anyone who got their grant before this enjoys the full benefit of stock price appreciation until their existing grant runs out. This is generally the point of giving stock compensation - it's supposed to incentivize workers to care about how well the company stock does, which in rough terms is a proxy for how well the business does.