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I'll given an example. If you had $200k in yearly cash compensation from Apple starting in 2019 then you'd make $200k this year. If you had $200k in yearly RS

I'll given an example. If you had $200k in yearly cash compensation from Apple starting in 2019 then you'd make $200k this year. If you had $200k in yearly RSU compensation from Apple starting in 2019 then you'd make $800k this year.

saagarjha 4y ago
If you had $200k in yearly TWTR you’d make $100k this year. Things don’t always go up.
- marcinzm 4y ago
  If you joined in 2019 then you'd make around $200k this year. Last year you'd have made around $350k. Still better or equal to getting cash every year.
  - RHSeeger 4y ago
    So, the lottery is better than a savings account, because if you win the upside is much higher? Whether or not stocks options/rsus/whatever are worth more than an increase in salary is very dependent on the timing, the company, and variety of other things. You can just as easily point out losing situations as you can winning; in fact, I'd wager the losing is more common.
    - marcinzm 4y ago
      It's a fairly controlled bet with relatively little downside (companies are likely to cover a large drop in RSU value) and a lot of upside. Since the vesting window is 4 years, you can sell as soon as things best, you still get a salary and you can switch jobs at any time the risk isn't that high. And since you can make up a decade of regular income in a few years the logical approach is to roll dice when younger if you can.
spaceywilly 4y ago
Couldn’t you use the 200k cash alternative to buy AAPL, theoretically, and end up in the same boat? And in that case you can also buy a mix of other stocks to diversify instead of having it all in one company. I’d take cash any day personally.
- marcinzm 4y ago
  No, the future unvested RSUs increase in value with the stock price. Your cash comp doesn't. If you got cash then you'd have made $200k the first year, $200k the second and $200k the third. If you got RSUs then you'd have made $350k the first year, $660k the second and $800k the third.
  - spaceywilly 4y ago
    No I would make 400k the first year. It’s cash as an alternative to the RSUs, not just deleting the RSU part entirely
    - marcinzm 4y ago
      That wasn't the example I gave to simplify things but sure if you want that then: If you got cash then you'd have made $400k the first year, $400k the second and $400k the third. If you got RSUs then you'd have made $550k the first year, $860k the second and $1000k the third.
      - tharkun__ 4y ago
        That assumes you just keep the cash. I think what they meant was: First year make 400k, buy 200k worth of something that is not just one egg basket. But because it's salary you do that every ~2 weeks so you end up with hopefully more than 200k by end of year already too. Continue example over the other 3 years. Yes the upside is smaller as I would assume the broader market part would return less in the upside case. The point is that your downside is 'better'. Instead of your tech stock tanking over proportionally you'd be down less or be even or could decide to stay in cash mid year as markets tank and interest rises or buy something else like a house. It basically allows for better 'control' and a less bad worst case at the cost of being able to 'win the lottery'. Of course you are right that just buying one stock, even if not your own company from the cash is actually worse overall. If you were gonna do that, just get the RSUs.

saagarjha 4y ago

If you had $200k in yearly TWTR you’d make $100k this year. Things don’t always go up.

marcinzm 4y ago
If you joined in 2019 then you'd make around $200k this year. Last year you'd have made around $350k. Still better or equal to getting cash every year.
- RHSeeger 4y ago
  So, the lottery is better than a savings account, because if you win the upside is much higher? Whether or not stocks options/rsus/whatever are worth more than an increase in salary is very dependent on the timing, the company, and variety of other things. You can just as easily point out losing situations as you can winning; in fact, I'd wager the losing is more common.
  - marcinzm 4y ago
    It's a fairly controlled bet with relatively little downside (companies are likely to cover a large drop in RSU value) and a lot of upside. Since the vesting window is 4 years, you can sell as soon as things best, you still get a salary and you can switch jobs at any time the risk isn't that high. And since you can make up a decade of regular income in a few years the logical approach is to roll dice when younger if you can.

spaceywilly 4y ago

Couldn’t you use the 200k cash alternative to buy AAPL, theoretically, and end up in the same boat? And in that case you can also buy a mix of other stocks to diversify instead of having it all in one company. I’d take cash any day personally.

marcinzm 4y ago
No, the future unvested RSUs increase in value with the stock price. Your cash comp doesn't. If you got cash then you'd have made $200k the first year, $200k the second and $200k the third. If you got RSUs then you'd have made $350k the first year, $660k the second and $800k the third.
- spaceywilly 4y ago
  No I would make 400k the first year. It’s cash as an alternative to the RSUs, not just deleting the RSU part entirely
  - marcinzm 4y ago
    That wasn't the example I gave to simplify things but sure if you want that then: If you got cash then you'd have made $400k the first year, $400k the second and $400k the third. If you got RSUs then you'd have made $550k the first year, $860k the second and $1000k the third.
    - tharkun__ 4y ago
      That assumes you just keep the cash. I think what they meant was: First year make 400k, buy 200k worth of something that is not just one egg basket. But because it's salary you do that every ~2 weeks so you end up with hopefully more than 200k by end of year already too. Continue example over the other 3 years. Yes the upside is smaller as I would assume the broader market part would return less in the upside case. The point is that your downside is 'better'. Instead of your tech stock tanking over proportionally you'd be down less or be even or could decide to stay in cash mid year as markets tank and interest rises or buy something else like a house. It basically allows for better 'control' and a less bad worst case at the cost of being able to 'win the lottery'. Of course you are right that just buying one stock, even if not your own company from the cash is actually worse overall. If you were gonna do that, just get the RSUs.