4 ms·
This isn't right because you're granted the stock when you start, and can sell when you vest vs with your salary you can only invest it after you receive it. He
by wan23 5y ago
This isn't right because you're granted the stock when you start, and can sell when you vest vs with your salary you can only invest it after you receive it. Here's an example. Let's say you get hired today with a package that amounts to $200k salary + $100k/yr RSUs over 4 years at a public company. Let's also say the stock is increasing at a rate of 10%/year.
Year 1: $200k salary + $110K stock = $310k TC
Year 2: $200k salary + $121K stock = $321k TC
Year 3: $200k salary + $133K stock = $333k TC
Year 4: $200k salary + $146K stock = $346k TC
Without any kind of raise or refresher grant you're making 15% more total in year 4 than when you started. When the stock vests, you pay tax as if it were ordinary income, and you can sell immediately for cash.
That example was for a stock growing at 10%. Now consider if that company was Alphabet.
Stock price for GOOG on Jan 1, 2019: 1116
Stock price for GOOG on Jan 1, 2020: 1434 (+28%)
Stock price for GOOG on Jan 1, 2021: 1835 (+27%)
Stock price for GOOG on Jan 1, 2022: 2753 (+50%)
- oh_sigh 5y agoSure. Now consider the opposite where the stock flatlines for 4 years whereas the market otherwise goes up. Not as good of a deal any more.
- joshuamorton 5y agoThen its exactly the same as if your salary were 110K higher each year, so its no longer a better deal, but its not a bad one unless the stock (significantly) underperforms whatever your normal investment mix would be.