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Ask HN: Are RSUs worth your loyalty?

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Re: Ask HN: Are RSUs worth your loyalty?

#91

Post by seanhunter »

alex_young wrote: post #34
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 are for public companies.

They are more common at public companies, but a company doesn't need to be publicly traded to give people RSUs. Conversely, a public company can pay in options rather than RSUs (or both) if they want.

Source: Work for a non publicly traded company and have RSUs not options, previously worked for a publicly-traded company that issued RSUs and options as part of comp

Re: Ask HN: Are RSUs worth your loyalty?

#92

Post by ThrustVectoring »

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…

An RSU grant from a publicly-traded company is equivalent to a cash bonus that is tied to the current stock price of the company.

Re: Ask HN: Are RSUs worth your loyalty?

#93

Post by shitpostbot »

ryandrake wrote: post #86
lnanek2 wrote: post #10

Aren't RSUs the opposite of job security? If you get fired or leave before they vest, you lose them. In the bay area they are often called golden handcuffs because developers halfway through their 4 year term often have another million in RSUs vesting, so can't go leave and work on their friend's awesome startups and the like, since the startups can't afford to match the compensation.

Look at it this way: say you make $100k per year. This means you’ve got $1M coming over 10 years! If you leave after 2 years, do you feel like you are giving up $800k?probably not. So why not think of RSUs the same way? That’s how I think of RSUs: they aren’t yours until they vest: they’re just like future pay, so you’re not really giving anything up if you leave “early”.

The only people dealing with RSU handcuffs are people whose companies have gone up significantly in value since they got their grants.

If you leave youre essentially throwing away the time you invested letting those RSUs appreciate, and your next company has no guarantee of doing as well as your current one has.

If you were granted 200k/y in stock for 4 years, after 4 years you could be making 200k+ above your market rate. If the salary bump from changing gigs doesn't cover the appreciation you've got a case of RSU handcuffs.

Re: Ask HN: Are RSUs worth your loyalty?

#94

Post by shitpostbot »

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…

You've got it backwards. From a time-value-of-money perspective RSUs are a dollar now and a regular salary is a dollar in 4 years.

If a company told me they would give me 4 years of salary on my first day of work, as long as I only invest it and dont spend it, that would be obscenely lucrative. That's pretty much what RSUs are.

Re: Ask HN: Are RSUs worth your loyalty?

#95

Post by ThrustVectoring »

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.

That's not exactly what I'm saying, it's easier to discuss with an arbitrary example: suppose you get a job offer for $100k in cash and 1000 RSUs at a current stock price of $100. I'm saying that you should value this at slightly more than $200k/yr.

Suppose after some time you start looking for jobs again, get another offer worth $215k/yr, and the stock price has done some movement. If the price is above $115/share, this would be a pay cut, so you decline the offer and state what it would take to get you on board. If it's below $115/share, you accept the job offer and get a pay raise.

This is what I mean by "optionality" here. If your employer's stock does well, you get an automatic raise from staying put. If your employer's stock does poorly, you get a raise with effort from finding alternate employment. You are more exposed to upside than downside in your employer's stock - it's effectively a call option with a strike price equal to the difference between your current cash compensation and your best alternative to negotiated agreement.

Re: Ask HN: Are RSUs worth your loyalty?

#96

Post by ThrustVectoring »

liuyipei wrote: post #74
tanderson92 wrote: post #11

Earlier quoted context omitted.

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.

Correct. I wouldn't use the term "extrinsic value", though, because it only explains what I'm thinking to people already exposed to real option analysis.

Re: Ask HN: Are RSUs worth your loyalty?

#97

Post by agentofoblivion »

I have one of the happier cases perhaps. At time of hire, my target comp was around $160k, RSUs were backloaded to mainly vest in years 3 and 4. I’m now in those years, and stock has risen a lot. Now I’m making more like $230k. Sure, they used that once to not give me a big raise, but I got promoted once with a 25% raise and it’s hard to complain when I’m bringing home far more than I would have thought. So RSUs can be good.

Re: Ask HN: Are RSUs worth your loyalty?

#99

Post by thisisit »

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…

My experience has been that the value of RSUs can be unstable to be considered as a paycheck. My last employer had a price based vesting.

For example, they gave me $10000 RSU vesting over 4 years. Then they used the current share price, say $10 as the fair value. 10000/10 = 1000 RSU vesting over 4 years.

If within those 4 years, share values go down below $10 I have made a loss. Because $9 * 1000 = $9000 worth of shares. And it happened with my last employer.

In such cases, it is no longer a paycheck. Rather a bonus which might or might not pan out.

When I started searching for a job it actually put me at a disadvantage. Whenever I talked with employers who had no RSUs benefit plans they always tried to reduce the value of my total paycheck. The refrain often was "You said $10 but I see only $9. So, you are not getting $10000 shares rather $9000 worth of shares".

Re: Ask HN: Are RSUs worth your loyalty?

#100

Post by tanderson92 »

ThrustVectoring wrote: post #95
tanderson92 wrote: post #11

Earlier quoted context omitted.

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

That's not exactly what I'm saying, it's easier to discuss with an arbitrary example: suppose you get a job offer for $100k in cash and 1000 RSUs at a current stock price of $100. I'm saying that you should value this at slightly more than $200k/yr. Suppose after some time you start looking for jobs again, get another offer worth $215k/yr, and the stock price has done some movement. If the price is above $115/share,…

Got it, thanks.
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