5 ms·

3 years receiving vested stocks. If price stayed the same, it would be worth 200k. Today it is worth 80k. So no, thanks. Stocks are not worth unless you're FAAN

3 years receiving vested stocks. If price stayed the same, it would be worth 200k. Today it is worth 80k. So no, thanks. Stocks are not worth unless you're FAANG

PragmaticPulp 5y ago
The stocks vest progressively. You don’t literally have to wait 3 years to cash out. If you can’t afford a single but if variance then I guess RSUs won’t make you happy. But for everyone else they work just fine (unless your company goes down in flames, in which case you have bigger problems and are probably job searching anyway)
rco8786 5y ago
Incredibly untrue. I’m sorry that your particular company saw a 60% decrease in stock price over 3 years. But this is not the norm for any reasonably healthy company.
- mojomark 5y ago
  Fully concur. I recieved stock appreciation rights (SARs) as a bonus at one company for a few years. CEO drove company into the ground that effectively wiped out all of these SARs. I was bitter at the CEO for making stupid decisions, but not at the fact that my bonus was in the form of SARs. If I'd have stuck to my guns more, the company would have probably succeeded and the SARs could have had significant value. Bottom line, with stock payment, you have a say in their ultimate value. Do good work, company value invreases, you enrich yourself.
  - zerocount 5y ago
    It's hard to believe that your lack of contribution tipped the scales so the company failed. Doing good work, in itself, doesn't increase the value of the company.
    - Msw242 5y ago
      In small companies, the ability to influence the CEO against poor decisions can make a massive difference
- intuitionist 5y ago
  I think many people on HN may be too young to remember the early 2000s, when you’d kill someone for your stock price to be down only 60% over 3 years, but it absolutely happens to good companies too.
  - overrun11 5y ago
    You aren't guaranteed your salary either though and in many of those cases in the 2000's workers were laid off. Being paid entirely in cash salary doesn't make you immune to market turbulence.
  - srb4 5y ago
    I thought I was going to be rich with my first job at a startup out of college but the dot com bust basically made it all worthless. Stock is great but cash would have been better.
    - pb7 5y ago
      What would you have done with the cash? Hold it? That’s how the poor stay poor.
  - alisonkisk 5y ago
    It happened 1 year in 20, after an incredible run up, and good companies recovered.
  - rco8786 5y ago
    We can talk about normal expectations without having to explicitly state that black swan events can happen. If you took a stance of “I’m not going to take any pay in equity because I saw what happened in 2001” you would have left millions of dollars on the table over the last 20 years.
    - JohnHaugeland 5y ago
      I think that once you start looking for hard evidence on software company stocks, you're in for a learning experience.
- JohnHaugeland 5y ago
  In reality, most stocks decline. You know this from VCs hitting 10x semi-frequently and still losing money. Statistically speaking, they're correct.
  - rco8786 5y ago
    This is literally the opposite of reality. The private/VC market is not relevant here. We’re strictly talking about publicly traded companies.
    - okhobb 5y ago
      No this is actually true. Most stocks do go down (or at least only match much less risky investments like short-term bonds), but the stock market goes up because some stocks go up a lot. This is why all investors diversify. For example, the Russel 3000 Index goes up ~10% a year because they remove bad stocks and replace them with ones that seem better. But, employment at a single company with stock-based compensation is a concentrated bet on that single stock during the employment timeframe. Recently learned this from the excellent and very pithy Michael Batnick blog https://theirrelevantinvestor.com/2020/09/10/most-stocks-suck/ https://theirrelevantinvestor.com/2020/09/10/most-stocks-suc... who was citing https://wpcarey.asu.edu/department-finance/faculty-research/do-stocks-outperform-treasury-bills https://wpcarey.asu.edu/department-finance/faculty-research/...
      - overrun11 5y ago
        I agree the stock market has positive skew but in your career you will have enough bets to smooth out the effects of betting on a single stock. Additionally, you're not really making the same bet as an equity investor because your bet has optionality. Your downside is capped at less than a year in loss earnings because if the stock goes down and the company cannot bring you back up to market rate you just switch companies. If the stock goes up, you enjoy 4 years of above market compensation before getting reset to market rate.
        okhobb 5y ago
- smrtinsert 5y ago
  Classic survivorship bias
  - rco8786 5y ago
    /shrug. The vast, VAST majority of public companies do not lose 60% of their value in 3 years. I guess that’s just me surviving though.
Jensson 5y ago
If the stocks go down before they vest you can just leave for another company and reset your compensation to the normal level, it isn't like the contract says you have to stay. If you keep the stocks after they vest then that is your fault for keeping them instead of selling them.
sys_64738 5y ago
I don't think you realize how wrong you are. Many average, boring tech companies pay RSUs big style. Not FAANG big but they're worth crazy amounts.

3 years receiving vested stocks. If price stayed the same, it would be worth 200k. Today it is worth 80k. So no, thanks. Stocks are not worth unless you're FAANG

PragmaticPulp 5y ago

The stocks vest progressively. You don’t literally have to wait 3 years to cash out. If you can’t afford a single but if variance then I guess RSUs won’t make you happy. But for everyone else they work just fine (unless your company goes down in flames, in which case you have bigger problems and are probably job searching anyway)

rco8786 5y ago

Incredibly untrue. I’m sorry that your particular company saw a 60% decrease in stock price over 3 years. But this is not the norm for any reasonably healthy company.

mojomark 5y ago
Fully concur. I recieved stock appreciation rights (SARs) as a bonus at one company for a few years. CEO drove company into the ground that effectively wiped out all of these SARs. I was bitter at the CEO for making stupid decisions, but not at the fact that my bonus was in the form of SARs. If I'd have stuck to my guns more, the company would have probably succeeded and the SARs could have had significant value. Bottom line, with stock payment, you have a say in their ultimate value. Do good work, company value invreases, you enrich yourself.
- zerocount 5y ago
  It's hard to believe that your lack of contribution tipped the scales so the company failed. Doing good work, in itself, doesn't increase the value of the company.
  - Msw242 5y ago
    In small companies, the ability to influence the CEO against poor decisions can make a massive difference
intuitionist 5y ago
I think many people on HN may be too young to remember the early 2000s, when you’d kill someone for your stock price to be down only 60% over 3 years, but it absolutely happens to good companies too.
- overrun11 5y ago
  You aren't guaranteed your salary either though and in many of those cases in the 2000's workers were laid off. Being paid entirely in cash salary doesn't make you immune to market turbulence.
- srb4 5y ago
  I thought I was going to be rich with my first job at a startup out of college but the dot com bust basically made it all worthless. Stock is great but cash would have been better.
  - pb7 5y ago
    What would you have done with the cash? Hold it? That’s how the poor stay poor.
- alisonkisk 5y ago
  It happened 1 year in 20, after an incredible run up, and good companies recovered.
- rco8786 5y ago
  We can talk about normal expectations without having to explicitly state that black swan events can happen. If you took a stance of “I’m not going to take any pay in equity because I saw what happened in 2001” you would have left millions of dollars on the table over the last 20 years.
  - JohnHaugeland 5y ago
    I think that once you start looking for hard evidence on software company stocks, you're in for a learning experience.
JohnHaugeland 5y ago
In reality, most stocks decline. You know this from VCs hitting 10x semi-frequently and still losing money. Statistically speaking, they're correct.
- rco8786 5y ago
  This is literally the opposite of reality. The private/VC market is not relevant here. We’re strictly talking about publicly traded companies.
  - okhobb 5y ago
    No this is actually true. Most stocks do go down (or at least only match much less risky investments like short-term bonds), but the stock market goes up because some stocks go up a lot. This is why all investors diversify. For example, the Russel 3000 Index goes up ~10% a year because they remove bad stocks and replace them with ones that seem better. But, employment at a single company with stock-based compensation is a concentrated bet on that single stock during the employment timeframe. Recently learned this from the excellent and very pithy Michael Batnick blog https://theirrelevantinvestor.com/2020/09/10/most-stocks-suck/ https://theirrelevantinvestor.com/2020/09/10/most-stocks-suc... who was citing https://wpcarey.asu.edu/department-finance/faculty-research/do-stocks-outperform-treasury-bills https://wpcarey.asu.edu/department-finance/faculty-research/...
    - overrun11 5y ago
      I agree the stock market has positive skew but in your career you will have enough bets to smooth out the effects of betting on a single stock. Additionally, you're not really making the same bet as an equity investor because your bet has optionality. Your downside is capped at less than a year in loss earnings because if the stock goes down and the company cannot bring you back up to market rate you just switch companies. If the stock goes up, you enjoy 4 years of above market compensation before getting reset to market rate.
      - okhobb 5y ago
smrtinsert 5y ago
Classic survivorship bias
- rco8786 5y ago
  /shrug. The vast, VAST majority of public companies do not lose 60% of their value in 3 years. I guess that’s just me surviving though.

Jensson 5y ago

If the stocks go down before they vest you can just leave for another company and reset your compensation to the normal level, it isn't like the contract says you have to stay. If you keep the stocks after they vest then that is your fault for keeping them instead of selling them.

sys_64738 5y ago

I don't think you realize how wrong you are. Many average, boring tech companies pay RSUs big style. Not FAANG big but they're worth crazy amounts.