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Ask HN: Are RSUs worth your loyalty?

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Re: Ask HN: Are RSUs worth your loyalty?

#71

Post by fatnoah »

matmann2001 wrote: post #56

RSUs are a decent way of aligning company success with employee success. But there's plenty of pitfalls with RSUs too. 1) From an investment risk perspective, your personal livelihood is already significantly tied to the company because you rely on the company for a salary. Holding a significant chunk (relative to your total investments) of stock in your company as well adds to that risk. 2) Unless you're a C-suite e…

>4) From a tax filing perspective, RSUs and ESPPs can be a PITA. In my experience, tax software and general tax filing services often don't know how to correctly record the cost basis, which means you end up getting taxed twice if you don't know what you're doing.

Oh boy, this is a thing I have to watch out for every year. Even better are the inserts that come with my tax statements from the brokerages which state things in a very confusing way.

Re: Ask HN: Are RSUs worth your loyalty?

#72

Post by tmarman »

ozten wrote: post #12
ThrustVectoring wrote: post #6

RSUs are worth very slightly more than straight cash compensation due to the optionality. Your compensation will go up and down as the underlying stock moves, and you are allowed to switch jobs when the stock price moves downwards.

RSUs are worth more due to tax implications? I'd rather have a dollar now versus the equivalence of a dollar in a stock which is unavailable for up to 4 years... Even if your companies stock is out performing the market, I'd rather have a dollar now to buy company stock and keep my mobility. Employees need to be careful to diversify their portfolio. A dollar today can be put in any type of investment, whereas RSUs ca…

... except the choice is not a dollar now vs. a dollar of stock in 4 years. RSUs are calculated as part of your total annual compensation the same was as salary. A grant of $100k RSUs that vest over 4 yrs would be more the equivalent of $25k more in salary, not $100k bonus.

Yes, there's the diversification problem but it's not like you have that same money upfront to invest in anything you want.

Re: Ask HN: Are RSUs worth your loyalty?

#73

Post by tmarman »

myvoiceismypass wrote: post #63
SubuSS wrote: post #53

Earlier quoted context omitted.

The problem being I can't think of a single company that offers an all cash deal even close to the FAANG offers (or pre-ipo offers in one of the unicorns). Even a bunch of giant companies like HBO/Samsung etc. got priced out for the same reason at least in a few cases I know.

Netflix offers all cash comp (plus options, not the same)

Came to say this.

Of course, having NFLX RSUs over the last 10 yrs would be worth more than the salary increase, just saying.

Re: Ask HN: Are RSUs worth your loyalty?

#74

Post by liuyipei »

tanderson92 wrote: post #11
ThrustVectoring wrote: post #6

RSUs are worth very slightly more than straight cash compensation due to the optionality. Your compensation will go up and down as the underlying stock moves, and you are allowed to switch jobs when the stock price moves downwards.

You still lost that money though, the optionality isn't worth anything because you gain nothing on the RSUs by switching jobs.

I think what OP was trying to say was that fluctuations in RSU-valuation increases the extrinsic value of your option to switch jobs.

Re: Ask HN: Are RSUs worth your loyalty?

#75

Post by ryaan_anthony »

mabbo wrote: post #55

You should think of RSUs no differently than you think of your paychecks. There is a scheduled date (every 2 weeks for my paycheck, every 6 months for my RSUs) where I will be given some dollars if I am still working here. I will pay income tax on that income. One is in the form of money and the other is in the form of stocks, but really you should sell those stocks and buy something more stable and not tied to your…

Or if the company is sold before you vest, the new management can decide not to honor your RSUs. It happened to me!

Re: Ask HN: Are RSUs worth your loyalty?

#76

Post by crmrc114 »

ryaan_anthony wrote: post #75
mabbo wrote: post #55

You should think of RSUs no differently than you think of your paychecks. There is a scheduled date (every 2 weeks for my paycheck, every 6 months for my RSUs) where I will be given some dollars if I am still working here. I will pay income tax on that income. One is in the form of money and the other is in the form of stocks, but really you should sell those stocks and buy something more stable and not tied to your…

Or if the company is sold before you vest, the new management can decide not to honor your RSUs. It happened to me!

Holy crap that would suck, how many staff did they loose when they decided to screw with peoples pay like that?

I would think, as a company, you would just be shooting yourself in the foot unless you did something like increased base-pay to cover the loss of RSUs.

Re: Ask HN: Are RSUs worth your loyalty?

#77

Post by toast0 »

lnanek2 wrote: post #40
qeternity wrote: post #22

Earlier quoted context omitted.

If you get fired, unless it qualifies under some due cause, the options should immediately vest.

> If you get fired, unless it qualifies under some due cause, the options should immediately vest. That definitely didn't happen at my company. We had a round of layoffs and the package offered to people who signed an agreement not to sue only included a couple weeks of accelerated vesting. There was no performance management system in place either, so the people fired were basically just the bottom of the stack rank…

> There was no performance management system in place either, so the people fired were basically just the bottom of the stack rank their managers were asked to turn in, which was often based more on personal like or dislike than performance.

And that differs from the result of a performance management system how? Maybe that rank and file didn't have to spend as much time writing reviews?

Re: Ask HN: Are RSUs worth your loyalty?

#78

Post by crmrc114 »

nugget wrote: post #39
dominotw wrote: post #14

Earlier quoted context omitted.

> have another million in RSUs vesting I would gladly wear these handcuffs :D

What are you willing to sacrifice to vest those RSUs, besides just time? Your mental health? Your physical health? Watching your kids grow up? Your marriage? Etc. As other folks have alluded to it can sound relatively trivial (and sometimes it is, but often not) until you're actually staring into the abyss. The flip side is that quarterly RSU vesting is highly effective as a retention tool. I've known brilliant peopl…

Yep, sounds like Amazon. I used to joke that the only Engineers who were there longer than four years were either getting divorced or were already divorced. You did not find very many who were married with kids AND happy working there.

Re: Ask HN: Are RSUs worth your loyalty?

#79

Post by toast0 »

fatnoah wrote: post #71
matmann2001 wrote: post #56

RSUs are a decent way of aligning company success with employee success. But there's plenty of pitfalls with RSUs too. 1) From an investment risk perspective, your personal livelihood is already significantly tied to the company because you rely on the company for a salary. Holding a significant chunk (relative to your total investments) of stock in your company as well adds to that risk. 2) Unless you're a C-suite e…

>4) From a tax filing perspective, RSUs and ESPPs can be a PITA. In my experience, tax software and general tax filing services often don't know how to correctly record the cost basis, which means you end up getting taxed twice if you don't know what you're doing. Oh boy, this is a thing I have to watch out for every year. Even better are the inserts that come with my tax statements from the brokerages which state th…

There was a time where some brokerages would report ESPP correctly and some wouldn't. Thankfully, the IRS stepped in and mandated consistent reporting; unthankfully, they mandated that brokerages consistently report ESPP incorrectly.

Re: Ask HN: Are RSUs worth your loyalty?

#80

Post by gigatexal »

awinder wrote: post #37
gigatexal wrote: post #23

Earlier quoted context omitted.

Depends on the actual numbers. They could be worthless or worth millions. Every funding round changes that.

RSUs should be a lot more reality based, these are not options to purchase on a hypothetical future liquidity event, they're restricted stock that turns into real shares on public markets upon vesting.

Ahh I was thinking they were options. Never mind. Does one still pay taxes every year on the RSUs should they rise in paper valuation before vesting?
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