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<<Get paid 10M in RSUs. Sell when they vest at 2x the value in 5 years. 20M pay 50% in capital gains and keep 10M.>> You probably meant to write 20M pay 50% in
by dh2022 4y ago
<<Get paid 10M in RSUs. Sell when they vest at 2x the value in 5 years. 20M pay 50% in capital gains and keep 10M.>>
You probably meant to write 20M pay 50% in income tax.
I still do not get your point. This situation is tax advantageous only if the stock appreciates. if the stock is flat there is no tax advantage. If the stock declines this situation becomes a tax dis-advantage.
Motivating executives to increase stock price over a medium time horizon (these RSUs vest over 4 years) to have this tax advantage is not a bad incentive...
- Retric 4y agoExecutives generally renegotiate their contracts if the stock noticeably decline before RSUs vest assuming they don’t get fired or just leave. That’s the thing executives are negotiating the kind of compensation they want and the risks they are willing to live with. The point is to get paid in a tax advantaged fashion without the risks associated with stock options.