4 ms·

> while my employer posts record profits quarter after quarter, and the executives get 50% raises every year. Just switch to a mostly stock based comp.

naikrovek 5y ago
if only it were that easy.
- OJFord 5y ago
  If you assume your total compensation is static (which it must be if you also assume/control for risk) then it is pretty easy? Just invest whatever you're getting in cash that you wish you were getting in stock. And really ceteris paribus that's better - you can invest it wherever, not just where you work.
  - duped 5y ago
    Outside the tech bubble the vast majority of people don't have the cash flow to do this
    - OJFord 5y ago
      And such people are being compensated in mostly stock as an alternative?
      - duped 5y ago
        No? They're spending their income on housing, food, education, and healthcare. People don't have the capacity to put their cash into savings, let alone investments.
        OJFord 5y ago
        Exactly, I don't understand your comment 'some people don't have so much compensation' in response to discussion on the cash/stock split and whether it matters? I don't disagree with you, it's just.. not relevant? Obviously if your compensation is too low to invest anything, you need it all in cash. It will be anyway. My suggestion was that cash is king as it's flexible anyway, so that's not even incompatible.
  - sushsjsuauahab 5y ago
    It is inefficient to pay taxes on your salary, buy stocks, and then pay tax on those upon sale.
    - OJFord 5y ago
      Tax-efficient vehicles exist, just as they do and don't for stock received as part of compensation. Depends on jurisdiction and personal situation, what's available to you, etc. not really a good blanket objection.
  - deanmoriarty 5y ago
    With RSU you’ll get your 4 year grant (and refreshers) upfront, so hopefully shares will have substantially grown and more than kept up with inflation by the time they vest years later. This strategy cannot really be reproduced by investing your after-tax paycheck into the stock. It’s “similar” (not really but I like the analogy) to buying a house with cash vs getting a mortgage for the maximum amount you can get away with and slowly paying it off. Massive difference by the end of the investment.
- 908B64B197 5y ago
  That's what the top tech companies already do. If your company isn't doing it, that's a red flag that they aren't tech focused and treating tech as a cost center.
crossroadsguy 5y ago
Without having a trillion terms and conditions coming in with those those stocks?
thoughtstheseus 5y ago
^this is the solution no one wants to talk about. Everyone says they want a broader distribution of wealth but still refuse to compensate employees remotely proportionate to shareholders. We can’t keep waiting for taxes or government deficits/spending to redistribute.

naikrovek 5y ago

if only it were that easy.

OJFord 5y ago
If you assume your total compensation is static (which it must be if you also assume/control for risk) then it is pretty easy? Just invest whatever you're getting in cash that you wish you were getting in stock. And really ceteris paribus that's better - you can invest it wherever, not just where you work.
- duped 5y ago
  Outside the tech bubble the vast majority of people don't have the cash flow to do this
  - OJFord 5y ago
    And such people are being compensated in mostly stock as an alternative?
    - duped 5y ago
      No? They're spending their income on housing, food, education, and healthcare. People don't have the capacity to put their cash into savings, let alone investments.
      - OJFord 5y ago
        Exactly, I don't understand your comment 'some people don't have so much compensation' in response to discussion on the cash/stock split and whether it matters? I don't disagree with you, it's just.. not relevant? Obviously if your compensation is too low to invest anything, you need it all in cash. It will be anyway. My suggestion was that cash is king as it's flexible anyway, so that's not even incompatible.
- sushsjsuauahab 5y ago
  It is inefficient to pay taxes on your salary, buy stocks, and then pay tax on those upon sale.
  - OJFord 5y ago
    Tax-efficient vehicles exist, just as they do and don't for stock received as part of compensation. Depends on jurisdiction and personal situation, what's available to you, etc. not really a good blanket objection.
- deanmoriarty 5y ago
  With RSU you’ll get your 4 year grant (and refreshers) upfront, so hopefully shares will have substantially grown and more than kept up with inflation by the time they vest years later. This strategy cannot really be reproduced by investing your after-tax paycheck into the stock. It’s “similar” (not really but I like the analogy) to buying a house with cash vs getting a mortgage for the maximum amount you can get away with and slowly paying it off. Massive difference by the end of the investment.
908B64B197 5y ago
That's what the top tech companies already do. If your company isn't doing it, that's a red flag that they aren't tech focused and treating tech as a cost center.

crossroadsguy 5y ago

Without having a trillion terms and conditions coming in with those those stocks?

thoughtstheseus 5y ago

^this is the solution no one wants to talk about. Everyone says they want a broader distribution of wealth but still refuse to compensate employees remotely proportionate to shareholders. We can’t keep waiting for taxes or government deficits/spending to redistribute.