4 ms·

Well, if you were paid $0 base salary, but $300k at the end of two years if you meet some high level of performance and keep it there the entire time, does that

Well, if you were paid $0 base salary, but $300k at the end of two years if you meet some high level of performance and keep it there the entire time, does that count as money? I wouldn't put money on that money. You can't pay a mortgage with that money, or feed your kids, or pay rent.

scarface74 5y ago
Major tech companies have a vesting schedule where you are guaranteed to get the stated amount of shares on a certain date. I knew the minimum number of shares I would get for the first four years after I got hired. After that, I will know for two years in advance.
- brailsafe 5y ago
  Ya but if anything happens to prevent that schedule from taking place, you won't get those shares. Is that not correct?
  - scarface74 5y ago
    Anything happens like you lose your job before the six months is up? That’s just like saying if they agreed to pay you $250K in cash, and you lost your job in June, you wouldn’t get the other $125K. But if we are talking about the 5 largest tech companies - Facebook, Apple, Amazon, Microsoft and Google, I doubt they are going to be so distressed that they are going to not pay their RSUs.
    - brailsafe 5y ago
      The difference in my mind is that you have a certain amount of liquid income paid to you gradually, probably twice a month. I feel like it's more comparable to a cash bonus, except that it's a different asset and different period. So if you lose your job before that 6 months, or whatever the time period is, you're still paid money from your salary, but only that. But perhaps I misunderstood something about RSUs or one of your previous comments. As a contractor, even cash is risky the longer you draw out the payment period and terms, and there's also time-value of money to consider.
      - scarface74 5y ago
        I live in a medium cost of living area so my base covers all of my living expenses. I use my RSUs for savings, vacations, and big ticket items. It’s about getting into a certain rhythm. Let’s say I get my RSUs in June. I have them set to sell as soon as I vest and now cash is just sitting in my brokerage account. At the beginning of every month, I have $1500 transferred to my main checking account. That offsets the deficit I have in my monthly budget after I have retirement savings deducted from my regular account. If I were getting the money monthly, I would save for big ticket items every month. I know I’m getting a net around $25K in six months, so I just allocate that. But in the grand scheme of things we are only talking about six months in the whole. It is slightly different from a bonus since statistically, you would expect your RSUs to go up over time. Your “bonus” is going to be worth more than the initial stated value. If you are granted 100 RSUs over 4 years when the stock was worth $100, even if they just go up with the rest of the stock market, the last amount will be worth 30% more when you vest. But this also assumes we are talking about the big 5 profitable tech companies and not places like Uber and Robinhood.
        brailsafe 5y ago
        Thanks for the overview, I do find it interesting to see how other people manage things. Like you say though, you're making a calculated risk assessment and allocating money ahead-of-time accordingly, and you also have a base salary and stability such that it makes sense to do so. I think if I were offered a new job, even at one of the big 5 (that isn't really in the cards fwiw), I wouldn't consider the same bet until I could all but guarantee that I'd have the job after that period of time. Particularly with a lot of people moving jobs in the last year, and with economic volatility, I think that's an appropriately conservative move to make for a lot of people. Would you disagree? Did you set out to do what you described as soon as you got the job and simply assumed that you'd have it 6 months, 1 year etc.. later? I personally hedge against having work 6 months out, but tend to account for that bias if I'm talking in generalities and be a little more optimistic. (high cost of living area, extreme income volatility, extremely unstable career, no savings, not a big spender etc..)
        5y ago

scarface74 5y ago

Major tech companies have a vesting schedule where you are guaranteed to get the stated amount of shares on a certain date. I knew the minimum number of shares I would get for the first four years after I got hired. After that, I will know for two years in advance.

brailsafe 5y ago
Ya but if anything happens to prevent that schedule from taking place, you won't get those shares. Is that not correct?
- scarface74 5y ago
  Anything happens like you lose your job before the six months is up? That’s just like saying if they agreed to pay you $250K in cash, and you lost your job in June, you wouldn’t get the other $125K. But if we are talking about the 5 largest tech companies - Facebook, Apple, Amazon, Microsoft and Google, I doubt they are going to be so distressed that they are going to not pay their RSUs.
  - brailsafe 5y ago
    The difference in my mind is that you have a certain amount of liquid income paid to you gradually, probably twice a month. I feel like it's more comparable to a cash bonus, except that it's a different asset and different period. So if you lose your job before that 6 months, or whatever the time period is, you're still paid money from your salary, but only that. But perhaps I misunderstood something about RSUs or one of your previous comments. As a contractor, even cash is risky the longer you draw out the payment period and terms, and there's also time-value of money to consider.
    - scarface74 5y ago
      I live in a medium cost of living area so my base covers all of my living expenses. I use my RSUs for savings, vacations, and big ticket items. It’s about getting into a certain rhythm. Let’s say I get my RSUs in June. I have them set to sell as soon as I vest and now cash is just sitting in my brokerage account. At the beginning of every month, I have $1500 transferred to my main checking account. That offsets the deficit I have in my monthly budget after I have retirement savings deducted from my regular account. If I were getting the money monthly, I would save for big ticket items every month. I know I’m getting a net around $25K in six months, so I just allocate that. But in the grand scheme of things we are only talking about six months in the whole. It is slightly different from a bonus since statistically, you would expect your RSUs to go up over time. Your “bonus” is going to be worth more than the initial stated value. If you are granted 100 RSUs over 4 years when the stock was worth $100, even if they just go up with the rest of the stock market, the last amount will be worth 30% more when you vest. But this also assumes we are talking about the big 5 profitable tech companies and not places like Uber and Robinhood.
      - brailsafe 5y ago
        Thanks for the overview, I do find it interesting to see how other people manage things. Like you say though, you're making a calculated risk assessment and allocating money ahead-of-time accordingly, and you also have a base salary and stability such that it makes sense to do so. I think if I were offered a new job, even at one of the big 5 (that isn't really in the cards fwiw), I wouldn't consider the same bet until I could all but guarantee that I'd have the job after that period of time. Particularly with a lot of people moving jobs in the last year, and with economic volatility, I think that's an appropriately conservative move to make for a lot of people. Would you disagree? Did you set out to do what you described as soon as you got the job and simply assumed that you'd have it 6 months, 1 year etc.. later? I personally hedge against having work 6 months out, but tend to account for that bias if I'm talking in generalities and be a little more optimistic. (high cost of living area, extreme income volatility, extremely unstable career, no savings, not a big spender etc..)
        5y ago