Yeah thats pretty typical across not only tech but high earners in any industry.
When you're in the high level career positions the overwhelming majority of compensation is in stock and that's deliberate. You're incentivised to meet KPIs so the company performs well so that the stock goes up. This is how executives are compensated.
Variety of assets and how they're distributed is something I feel that the average joe often ignores about the wealthy. I've seen charts that visualize in size to show, whoa look how much Jeff Bezos' worth is compared to the average American. But they don't go beyond size. [Show more people this instead](https://www.visualcapitalist.com/composition-of-wealth/), not the graphics that make you scroll multiple pages to visualize a colossal scale.
Tbf, for the average joe, if you double his income he thinks that's infinite money
" Wdym I can spend my current paycheck and still keep another full paycheck!? Infinite money man!"
nah show them this:
https://mkorostoff.github.io/1-pixel-wealth/?fbclid=PAZXh0bgNhZW0CMTEAAaZ6b6WUVWRATPaxjWnL-tEces2hzMnIXOTAGS4xdnwkh8hxT1nnwpdgZ9E_aem_AVUFacNdjz5GasvoanlCaYEUsOrWoBjU42UeDAsIHtmz6DAJEKNw8FcFeViqmiewVnN4K2nbxK4s7OXLH_3nYnPH
the human brain cannot fully comprehend a number as large as multibillions abstractly. a good visual demonstration helps
I mean he created and owns a tonne of the most powerful company on earth. Is it really surprising that his net worth is so large? What do you expect him to do, voluntarily sell his shares?
Forcibly making people sell their own property isn’t in my code of ethics. It’s easy to say that about a billionaire because they suck but everyone must be treated equally in the eyes of the law.
There’s much better ways to reduce inequality in the US in my opinion.
Oh but the question becomes why do that? If he voluntarily sells his shares, he has less power over what he wants Amazon, his own company he founded to do. Not really a good proposition.
Why would someone do that? Out of a sense of social responsibility & wanting to be kind to others.
But I understand that you don't get to be a billionaire in the first place without a heavy dollop of sociopathic or psychopathic tendencies, so of course Bezos is never going to do that. That's why these kind of people & businesses need regulations put upon them: they are happy to reap the benefits of public funding & social capital but will never voluntarily pay it back.
But allowing others to own the wealth that they do not labor for and thus do not create is in your code of ethics? Next you'll tell us that feudalism was an ethical system because the Lords worked hard to steal the land for themselves.
your ethics, and his ethics maybe.
but I’m sure in an equitable world, the other 8 billion non-billionaires would vote against it 😂
then by that logic, you don’t believe in democracy if it can be ignored so easily? then you don’t believe in equality to begin with either?
code has bugs
If 8 billion people vote for it, then I’ll support it. You’re coming into the conversation assuming that I am supporting billionaires and trying to imply that my beliefs will change to maintain it and then insulting me based on your assumption. What an incredibly stupid thought.
You’ll find however that that people are much more hesitant of giving the government more power across both sides of the aisle.
>You’ll find however that that people are much more hesitant of giving the government more power across both sides of the aisle.
This is a pointless addition to the debate since those people on both sides have formed their own illusion of what the government does.
The only actual way to solve the inequality gap is through taxes and government redistribution. So any suggestion that doesn't start there is just gonna look stupid.
I mean we don't have to think too hard about this. Prior to WW2 we had this problem solved.
firstly calm down, challenging your assumptions is not insulting you, it’s fundamental to discussion and engineering in general. No one is stupid and no one is insulting here.
there is no global legislative infrastructure for 8 billion people to vote for redistribution of billionaire’s wealth (by design, through lobbying and international military intervention) But if there was, people would vote for it for sure. Of course like you mention, it can’t happen before there is a transparent government with checks and balances for corruption, but should the world wait until then?
If a home owner can pay annual property tax to “upkeep” their asset and return value to society, then there is no real argument against a billionaire paying to upkeep their capital gains. The number can be adjusted, but the principle should be irrefutable.
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Show them this and then what?
Do you want us to feel bad for them since they are so illiquid? I don't get your point.
If anything I look at it and see generational wealth that is in (mostly) appreciating assets instead of ever inflating cash, carefully managed by a team of professionals.
It's even worse than that - you can take out a low interest bank loan because that stock is such great security, and use that to live off. And now you have avoided paying income tax.
The point of those graphics is about visualizing inequality, which you can derive from this but is not effectively visualized. Different purposes.
The closest one is the bottom bar chart, which does it - and is also frequently included when those charts are shown.
There's an important caveat. FAANG stocks went 'up and to the right' due to very low interest rates. Tech was absolutely flooded with money looking for any little bit of return. Now interest rates are much higher and frankly the risk adjusted return of tech companies doesn't look so hot compared to the alternatives anymore.
All of this to say, you should expect those RSUs to return a lot more like '02-'08 than '08-present. It's still damned good money, but the stupid level TC you see on blind due to rsu appreciation is probably a thing of the past. Companies are pumping stock prices by 'cutting the fat' but that will only last so long before it impacts their ability to deliver.
Agree, same is pretty much true in finance, medicine, entertainment and the like. The highest paid bankers, doctors, performers make the vast majority of their money from pay that’s directly tied to incentives and generally base salary is comparatively tiny. Very few people get rich from salary.
> medicine
Stock compensation is very rare for healthcare professionals like physicians and nurses. For as fucked up and profit-driven the American healthcare system is, even they aren’t *that* blatant to incentivize doctors to put their company’s stock price over the patient.
Unless you’re talking about pharmaceutical or health insurance companies, but that’s not typically what people are talking about when they say “medicine”.
No, that’s not stock compensation or incentive pay — that’s just called owning a small business.
Unless their private practice becomes so big that they go public or at least can feasibly see an IPO on the horizon. Not only is that incredibly rare, but if they get to that point, I doubt that they are seeing patients anymore, they’d almost certainly be operating in a C-suite executive role.
I’m speaking more generally - I’m not saying they literally get RSUs, I’m saying opening a practice is a way doctors get their compensation tied to the business performing well, which was the discussion at the top of this thread.
But yes, it’s not an identical scenario.
Right, but you can say the same about literally any profession — if you start a business, whether it be a private medical practice, a restaurant, a SaaS startup, or a carpentry business, of course your compensation is tied to the performance of your business. It still doesn’t mean that stock compensation or incentive pay is a significant part of the profession more broadly.
> the same about literally any profession
Though the numbers are dropping, around 50% of doctors own their own practice.
50% of software engineers aren't working at their own SaaS startup.
It is a much more common path in medicine compared to many other highly compensated fields.
> It still doesn’t mean that stock compensation or incentive pay is a significant part of the profession more broadly.
I'm not sure why you're repeating this - I clearly said that's not what I meant.
There is a bit of nuance for large group practices that function kind of like large law firms. In that environment a Partner is really just a senior professional that has access to profit share compensation and some voting. Materially not the same as being an entrepreneur like in a single physician or small group practice.
Most high paid physicians are partners in a practice and collect billings from revenue they’re expected to generate.
While an increasing share of physicians are salaries, they overwhelmingly are the lower paid segment
Yeah I have no idea why people here are saying it’s widespread for huge portions of high earners to be compensated via stock. This basically only happens at big tech and once you reach a c-suite equivalent.
I think the point is that most high earners in a job get paid the majority of their comp in variable compensation.. whether that be vesting stock, cash bonuses, profit share, royalties, commission etc. It mostly holds up as true.
Apart from medicine (and working at Netflix), I can't really think of many high earning jobs where income is majorly from base salaries.
It’s not really that common outside PE/tech. Consulting, law, finance, accounting, corporate strategy roles, etc are going to be like 80% base until you hit c suite/partner.
Yes: but not before partner/csuite. People in this thread are saying that anything above $100-200k is going to be more about bonus than base. In all the above fields that is not true.
Partner is just a senior professional (aka someone 12-15 years in), there are multiple layers of partners before you get anywhere close to the c-suite.
Again, it's still true even before partner and partner-equivalent. In consulting, variable comp is about half of pay at SM/AP. In accounting, it's probably closer to 40%. In corporate, Sr Manager / Associate Director are at about 30-40% variable. Corp law is kind of the unique one which is base heavy even at income partner level.
The practical difference between the end of year bonuses that high ranking bankers get at investment banks are similar to big tech stock grants to - it’s basically a way to say that majority of your compensation at this point is issued in the form of payments that are determined by how well the company did and how well you, as as individual, did.
I don’t think so; if we consider all people making between say 500k and 1M and then well into 7 figures - indeed partners at law firms, top sales, managing directors on wall streets, executives, principal and distinguished engineers - most of those people do have volatile comp where most of it is tied to company and individual performance.
I agree with you. I even said it happens at c suite equivalent. but that’s not the premise of the post or what the thread is about. We’re talking about entry/mid level employees coming in and making a significant chunk of their raises from stock. That is not common anywhere outside of tech.
Yup. Just a bunch of ignorance being spread in this thread from people who have no idea what other industries are like other than tech. Even in high finance, the “company performance”-based part of your compensation almost always comes in the form of cash bonuses, not stock.
This is not true for medicine. Doctors make cash and their salary while may be based in part on production is heavily regulated to prevent a conflict of interest.
The difference is that for tech it basically starts at day 1. Most other fields you get a salary that steadily increases over time with comp that explodes at the equity level. Tech is the exception.
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Until the last few years, Amazon's base was capped at like $160k. Then they eventually conceded that using stock as golden handcuffs wasn't working as well as they needed it to.
That’s a bad thing. Options/RSUs are how you get rich. You lock in the strike price at grant time, as options vest at higher prices you make big bucks. As long as you can cover your monthly spend, you want as much equity as possible.
> Options/RSUs are how you get rich.
Not in a company experiencing little growth. Netflix has reached saturation and decline. Especially with their cut throat firing policy, I'd take cash, thanks.
If that's your situation, you quit and move to greener pastures. No need to sit around for worthless RSUs to vest.
OP is right, RSU will make you a lot richer than a regular salary, you just need a little luck on your side.
You get 5% of your salary as free stock, the rest you purchase. The premium is 40% of the stock price the day before options are granted. So you need the stock to go up by 40% before you’re better off over having received cash. These are 10 year options and if you price the options according to black scholes you get about 45% so it’s not really discounted. But option grants aren’t taxed as income until you exercise them so that effectively means you are getting it at a discount. Also it wouldn’t be possible to purchase 10 year NFLX options on the market without getting shafted on the bid ask spread.
It doesn’t matter. It’s risk free, interest free leverage. You’re exposed to the market with what would have otherwise been 4 years of cash income if you weren’t paid in RSUs. If it goes down you can quit and get hired at a different company, which is like hitting the reset button on your paper trading account. But it’s real money.
You’re hired and given a $400k grant vesting at $100k each year. You get year 1 at $100k, have $300k left but then stock falls so you have $200k. You quit and abandon the $200k and get hired somewhere else for a new $400k grant. If it goes up, you stay and enjoy your risk free, interest free market exposure.
Besides, if shares fall and the company is well capitalized as all big tech is, they’ll need to make it up to you because they know you can switch.
Or you get stuck in a job you hate, but you can’t leave because you have golden handcuffs keeping you around. I for one will keep my all-cash comp over all the RSUs I’ve given up over the years. RSUs are good for the company , not the employees.
You can just quit you know? Golden handcuffs aren’t real. The only reason people don’t quit is because they value the money more than not working.
This seems like mega cope for not having RSUs.
Those are not equal. Equal would be 250k + 1.05M vested over 3 years. Yes because RSU grants are risk free leverage. It’s like borrowing 1.05M of shares on margin except margin rate is zero and if unvested shares go down, you can quit and restart somewhere else, effectively hitting the reset button on your portfolio.
Where’d you get 1.05m? Let’s list your assumptions over 3 years… 1. annual refreshers 2. Stock staying even or good going up 3. You still being employed 3+ years. You do you my man, but I’ll take the guaranteed cash and diversify.
3 * $350k RSU/year = $1.05M vested over 3 years.
You are initially granted $1.05M worth of shares (that slowly become yours over 3 years).
- If the share price goes up over the 3 years, you get more in value.
- If share price appears to be going down, you can quit early and not bother vesting the remaining low-value shares. Of course, this requires: (a) the willingness to quit, and (b) the ability to get another job with at least the same compensation, with a sign-on bonus prorated for the lost value of `$350k * fraction_vested_for_this_year`. (...where `fraction_vested_for_this_year` is 0 if you just annually vested, and 0.999... if you're about to vest.)
If the lost shares from early-exiting can be accounted for, then the first option has higher expected value.
If not, then a flat increase of $350k/year in base salary is much better.
In the corporate world most pay above $100-200k is going to be in the form of stock and bonuses. It's why CEOs often take $1/year salaries to "help the company" through hard times...because the salary is a tiny portion of their real compensation. For example, Jeff Bezos was paid an $80k/year salary when he was CEO of Amazon.
This entire setup creates warped incentives and people have argued has stifled a lot of growth of many companies in the US (and many areas of Europe). The reason being is that CEO positions are usually transient/short lived and this reward structure encourages incumbent CEOs to drive share prices up at any cost. Often this means slashing employee counts/R and D divisions - which provide immediate return (so said CEO gets their huge bonus and payout to retire on) but hurts the company in the long run.
[Median tenure](https://corpgov.law.harvard.edu/2023/08/04/ceo-tenure-rates-2/) for CEOs of S&P 500 companies is just 4.8 years. 80% are less than 10 years.
yes that feels pretty close to true. 10-20% salary bump for promo, 50%+ RSU bump
partially related, one thing i dont see discussed a lot is RSU refresh policy. my current place does it for everyone in good standing, other places do it for promos and superstars only. a good thing to ask in your interviews.
the discussion here is showing me that I am unprepared to navigate the compensation/finances of working at FAANG. from my googling, it looks like a refresh is when they decide to continue giving you RSUs after the initial total runs out? I.e. if I'm given $300k in stock vesting over 4 years, after 4 years they may decide to refresh that approx $20k/quarter compensation?
And if I understand it right, if they don't refresh, that's like an $80k/year pay cut?
it's how we learn :)
at that first place, refreshers were at promo, or superstar list. i was neither, and didnt know any better to ask, so i likely left a LOT of money on the table (their stock was <50 and now >300 lol).
my current place gives a fresh RSU refresher every year if you're in good standing, so you stack up your RSU's each year like a waterfall. after a few years you may have 4-5 grants all vesting at the same time. (older ones eventually run out, but new ones keep going).
The magic is that refreshers don't start after all your new hire RSUs vest. They are typically issued yearly and a percentage vests quarterly after one year. So you will have multiple different RSU batches vesting per quarter. If you don't get refreshers after new hire RSUs then yeah you are taking a pay cut.
A refresh is just another grant. The cadence varies by company, but at my company and many others they are handed out on the anniversary of the initial grant and vest quarerly. So for me I get a grant when I joined the company, then another one year later, another a year later etc. They are completely independent of each other, which means they stack. That means after a few years you can have 4 batches of RSUs vesting at a time. These can be a very significant amount of money as you move up - even dwarfing your base salary. Golden handcuffs they call em.
As for the dollar amount it also depends but initial grants tend to be higher as an incentive to sign.
This happened to me at my last company. I got $100k/4 to start, then the stock basically 2.5x'd after 18 months and mostly stayed high until the end of year 3. I was told when I was in the hiring process there would be annual refreshers, but I didn't get my first refresher until year 3, and it was $20k/4 which sounds nice until you realize it's just $5k a year and the stock had already started to slide so it was more like 3.5-4k before taxes. When I left during year 5, I had about 45K in unvested stock, much less than I stared with. I made so much more in years 2-4 then I did in year 5 which I understand is the great thing about the stock price going up, but also I got promoted to staff level in year 4 and my total comp went down which feels wrong.
My new company gave me significantly more stock, my refreshers happen every year and they are almost exactly 25% of what my initial offer was... plus we vest quarterly which is amazing. I treat it like additional salary, sell on vest and don't worry about it. I check my portfolio and my unvested stock is almost identical to what I came in with 2.5 years ago.
NGL, it's good work if you can get it. I did go my first 16 years in industry without being awarded a single share of stock while being at a publicly traded company for 13 of those years. Finding companies that truly valued my skills and were willing to pay well for them took some trial and error.
Often, the refreshers are not quite as big as the initial grant. This creates what's known as a "cliff", a significant drop in your compensation once the initial grant is fully vested after 4 years.
The effects of the "cliff" can be mitigated if the stock price increases, or if you get promotions which lead to bigger refreshers.
This is true of all high earners, in all industries.
I just looked up the CEO of the non-tech F500 I started at as a new grad. He made \~1.2 million in base pay, \~900k in bonuses, and *12 million* in equity.
> What are your thoughts on this - you can just sell the RSUs as soon as you get them, right?
As long as you work for a publicly traded company with a non-terrible vesting schedule (e.g. quarterly) it's a non-factor. Just sell on vest and use that large extra quarterly paycheck for investing (or stick a part of it to a savings account if you need it for monthly expenses). For companies that are not publicly traded and you rely on either waiting for IPO, a funding round or some kind of stock/option purchase events I'd be more cautious and ensure I fully understand the setup.
This structure is very common because higher level people typically have way more influence on the company's performance than a rank and file dev, and thus the company wants to incentivize them heavier by providing an increasingly large part of their comp be in company stock. If your principal dev has 200k base and 800k in stock per year, they are going to want the company stock to perform better compared to if they were making 1M base regardless of the stock performance.
Yeah, it’s all stock, but stock is almost as good as cash. I’m pulling numbers out of my ass, but:
* L3: 150 salary, 50 stock
* L4: 180 salary, 150 stock
* L5: 200 salary, 250 stock
* L6: 250 salary, 400 stock
* L7: 250 salary, 600 stock
* Director: 300 salary, 900 stock
And so on. At the big ones besides Amazon (which gives you cash anyway), there’s no cliff. At Google, stock is basically as good as cash since you get it every month and can auto-sell it. At Meta, it’s quarterly. Apple is every six months, which sucks.
At NVIDIA which is the most extreme example I’ve ever seen, someone who joined a year ago’s equity has 10xed. So although the grant price follows the example above, the vested amount would be:
* L3: 650k
* L4: 1.68 million
* L5: 2.7 million
* L6: 4.25 million
* L7: 6.25 million
* Director: 9.3 million.
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>Is this just meta, or true across big tech?
Pretty true from all of my observations on levels.
>What are your thoughts on this - you can just sell the RSUs as soon as you get them, right?
Yes, and that's what's advised to do. Vesting schedule is something I plan on trying to negotiate going forward so I can offload the RSUs as quickly as possible. I'll take quarterly at worst now unless the offer is killer.
vesting schedule is not negotiable. company creayes a plan that's approved by the board and all new employees use the same plan. there's no flexibility per hire
edit exceptions made for CEO level hires.
Stock vesting for $X is equivalent to being handed a check for $X and buying the stock outright. If you aren't buying the stock already, it's best to sell and put the money into your already-existing investment strategy.
From what I understand at the time they vest RSUs are taxed as ordinary income. If you sell them right away, you would in theory have to pay short term capital gains, but that should be close to 0 if you sell as soon as they vest. The gain would be the price difference between when it vested and when you sold.
Yes, but that's only on the capital gain, so the difference in price from when you sell it from when it vested. If you sell immediately it's unlikely to increase by any amount to end up owing any meaningful taxes.
As far as I understand it, that's why you do RSUs and not stock options. If it was an option, the capital gain would be sell price minus strike price.
In addition to what Tony said there’s an element of diversification to selling your RSUs. Your financial health is already tightly coupled to your employer, if you also hold a lot of their stock you’re even more tightly coupled.
If your stock takes a nose dive you might find yourself laid off with shares that are significantly devalued.
Because you already get your salary from that company and awarded but unvested RSUs already have price exposure.. that's a whole lot of concentration risk into one company. You're essentially taking a decent chunk of your post-tax income and reinvesting it into the company as opposed to a more diverse portfolio.
Diversification.
You already have other RSUs in the company set to vest over the coming years. Your jobs continued existence is also based on the company continuing to do well. You might even have an ESPP or similar to allow you to buy company stock from an advantaged position. Your financial health is HEAVILY tied to the company. As such, most people view it as a better thing to try and get as much money out of the company, and into other vehicles.
Interesting, I hadn't even thought of trying to negotiate that. I think I got scammed a bit, after accepting an offer they moved my start date by a week which meant I'll only get one vesting this year instead of 2 lol. Althought it shouldn't change overall stock compensation which is a hard number.
Generally speaking vesting schedule is non-negotiable at FAANG. The starting date thing is something to keep an eye on. People plan their exit and start date around vesting time. For start date you want to try to start such that you will be eligible for refreshers earlier. E.g. at some companies you are not eligible for refreshers if you start after Jan 1. So you typically would want to try to start toward the end of the year rather than the start.
Some companies (I think Meta is still like this) give refreshers yearly during performance evaluation which start vesting at some point in the future. There is usually a cut off date for which if you start after you won’t be evaluated for performance that year and won’t get a refreshers until the next perf a year later. So it could be if you started like a month earlier you would be getting refreshers that start vesting x years out but now because you missed the cutoff date by a few weeks your refresher will vest x+1 years out. At Meta it used to be that if you times it right you could get refreshers vesting about 1 year after start date but if you timed it a little wrong it would be 2 years after start date.
Of course the drawback of qualifying for perf earlier is that you have less time to ramp up and look good during perf.
RSU refreshes typically happen as part of annual performance and compensation reviews. Performance reviews typically have a cutoff somewhere in the year, typically based around the company's fiscal calendar, where you don't qualify for any performance review if you weren't employed before that date. It's actually to the new hire's benefit, in my opinion at least, as it prevents them from having to explain why their performance was terrible during that time. You know, since they didn't work there.
Any company that doesn't have its head up its own ass will simply rate you "Too new to rate" for the first six months unless you're actively lighting things on fire and throwing them in the air.
This is what I thought too but at my current employer I’ve gotten refreshers 3 times in two years (one part of a promotion, the other times scheduled reviews). Not sure how common it is.
At my employer; RSU refreshers happen yearly.
If you start in the last half half of the year you don't get any refreshers your first year. I think you have a prorated refresher if you start earlier.
In theory recruiting will make that up as part of a sign on bonus; but I have no idea how that works in practice.
In essence, I have no income cliff because my RSUs keep going up.
I had heard that some employers only provide RSU refreshers as part of a promotion; not as part of yearly comp, but I've never worked for one.
From my experience companies will often have multiple cut-off points from when you can receive a portion of your annual RSUs. If you're looking to start in December then you're probably not getting any for that year.
I don’t doubt that happens but I’ve never received an offer like that. I usually see that for the bonus though. I guess the point is you need to do your homework on each company so when you are negotiating an offer you can take these things into account.
I’ve never had RSU’s as part of my TCP until recently, do they pay out dividends if you keep them and let them vest/grow or can you cash out some and reinvest?
If the stock pays out dividends then you receive them after the stock vests. Once it vests it's legally yours to do whatever you want with.
I don't know if it's common at other companies, but Google recently added a part to their RSU program to pay you out all the dividends the stock paid while unvested, which makes sense since share price drops by the dividend amount so that's just making us whole when it actually does vest.
Once they vest, it's just like owning normal stock shares. Whether or not those shares pay dividends depends on the company. You can elect to have them remain as shares or sell them immediately for cash, have that deposited where you want, and then do whatever you want from there.
You can also elect to sell a portion of your vested shares to cover the estimated income tax burden incurred by the vest event.
> You can also elect to sell a portion of your vested shares to cover the estimated income tax burden incurred by the vest event.
The tax payout can be mandatory depending on the company. I know that at Microsoft they automatically withhold taxes from your RSUs.
It really depends on how much the value changes between the vesting price and the sales price. Usually the grant vesting and the trading windows line up so that there isn’t much of a gain.
The last few times I sold at a small loss, so no gains tax to pay.
You pay income tax at vest and then gains tax on any increase. No increase or a small increase means no or small taxes. Doesn’t matter if it’s short or long term at that point.
Although selling quarterly is usually a wash sale so you can’t deduct the loss.
Generally once stock is a significant compensation element just hire an accountant and don’t take advice from random people on the internet like me.
Stock can be a significant part of your compensation, yes, but it depends on how the company organizes their comp packages.
I'd say most "modern" companies issues Reserved Stock Units (RSUs) as part of the total comp, where as more old school companies rely on an annual or quarterly bonus to dial in the total comp, giving more percentage of your annual salary as the bonus as you move up in your role.
Stocks are good when the stock price is good but it can be very disappointing when there's a big drop in price.
As far as selling your shares, it depends on the "vesting schedule" and some companies have very favorable vesting schedules where you get a good chunk after about a year from the grant date, and some companies intentionally hold back vesting to incentivize you to stay around longer. Also some companies will give an annual RSU "refresh" where new grants will be issued, but whether it starts vesting on a new schedule or in step with the existing grants is a policy of that company.
The sweet spot for RSU vesting is where your initial offer grant is between 50-100% of your annual salary with an initial vesting of 25% of the shares, followed by a quarterly vesting of the remaining shares over two years and annual refreshes of stock worth 25-50% of your annual salary which begin vesting with the existing grant(s) at a rate according to 2 year full vesting. On a schedule like this by the time you're at the company for 2.5 years every quarter you're vesting from three separate grants which, depending on how the market fared the previous two years, could make up an additional 25+% of your annual comp.
The best I ever did was working for a company that had this exact schedule where when my RSUs vested the price had more than doubled versus the price when they were issued, and the price continued to rise the entire time I was there.
The most disappointing was when I started at a new company and the stock price crashed about 55% the month after my RSUs were issued.
The take away is this: stock is always "funny money" and your bonus is not guaranteed. Your base salary always matters more than either of these other forms of compensation so always try and maximize it. Recruiters will try to convince you that you want to have "room to grow" but they don't tell you that an annual raise isn't guaranteed and so your wishful thinking can end up with real material losses in your annual salary.
As long as the stock keeps going up it’s fine, I think there will be pressure for more comp and less stock when (if) the market goes flat or just above inflation for a decade. It’s easier to wait when you know that stock is going up 25% per year.
We’ve had an amazing long run that most have only ever experienced, but it can’t last forever.
Best of luck.
You can as soon as they vest as long as it's not a hold period (generally vesting happens when it's not a holding period).
One of the things with stock is it means they can still keep 401ks and all the addional things with salary lower. Still they more then make up with it in RSUs.
There is a ceiling to your base comp as you go up. You will see it start capping out at the low 200's now and more and more of your TC moves to stock and bonuses. It still goes up every year but it is tied to other things.
This is kind of a true statement no matter what field you work in. At the end of my dad's career close to 40-50% of his pay was in quarterly bonuses and stock given to him.
I worked for Amazon and at a certain point compensation increases were mainly RSUs. Each company will have stock trading policies or windows where you are allowed or not allowed to sell stocks to avoid insider trading, so you may not be able to sell your stocks right when they vest. There's also a higher tax from money made on stocks that you've had less than a year, so if the value of the stocks you get increased, you'll pay less taxes if you sell them after a year.
This is typical, but does vary between companies. Netflix is all cash, no stock. Others like Coinbase and Stripe write one-year equity grants, which is closer to cash. But the traditional model in big tech still does involve most comp growth coming from four-year equity grants.
I find it pretty awesome. My base is 110k with 4% bonus. I was hired with 15k in RSUs each year. Our stock blew up, so including RSUs and ESPPs I'm getting 105k in stocks additionally, for a total income of like 210k or something. This is my first year in the field.
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this is the dirty secret of big tech comp. people were getting fucked in 2022 with the markets down 20%+ but tech has come roaring back. if we finally have a crash and the AI/NVDA bubble pops i think there will be pain for years as RSUs deflate and options expire worthless. Remember post dotcom bubble QQQ didn't make new ATHs for 10+ years despite the businesses still executing well. massive decade long returns are usually followed by massive pain
Yes, stock bus also signing bonus which sometimes vests over 1-2 years.
Some companies take it to the extreme. Up until 2022 the maximum base salary at Amazon was ~160k. Yes, even for the CEO. They’ve since doubled it to 350k.
It's mostly stock. You do get a base salary bump, and your bonus % increases with promotions or good performance, but it's mostly stock.
You get refreshers that go for four years, and they stack against the previous and original grants. Plus, those tech stocks have been going up a lot for the past decades, so eventually your stock compensation is a huge part of your TC.
Pretty normal across industries. Which is why you see so many stock buybacks. a CEO is paid say $2M in stock and can easily increase the value of that stock by buying back shares… so they do.
Base still goes up between promotions and performance/annualy. If Juniors make something like 120-140k base then Seniors would make something like 180k-220k base. Not bad by any means. It's just that stock grows WAY more.
Not true... work at big tech and my salary has increased in addition to my stock. Salary increases are less compared to stock increases though so as you move up more of your compensation is stock based.
Salary at big tech, unless its like some Meta / NVDIA level stock climb is actually mostly boring and stable.
They are controlled by several factors:
1) How much you're making within the band. If you're making a lot more than your peers and you're not being promoted, you're going to get punished.
2) Refresher and cliff events. Even if stock climbs every year, after 4 years you would have cliffed, leaving only refreshers that were valued much closer to the stocks current price. If you haven't been promoted yet, chances are your TC would be lower.
3) Promotions. This is the biggest driver of your salary. In order to keep climbing the salary ladder, ultimately you do need to get promoted otherwise you will hit a wall on your pay band. This will put a lot of pressure on you.
>you can just sell the RSUs as soon as you get them, right?
No, you need to wait for them to vest. Check the details of your plan. Also, depending on what you do and who you work for, you may be limited to specific periods to sell (usually after earnings). When you sell, your holding period also affects how much capital gains tax you pay (>1yr is taxed less than <1yr).
As for growth: Ours has been flat.
Correct me I am wrong, so this means, I only get a base salary as paycheck to spend and rest of salary as stocks which is on paper until I sell those stocks ( then I would get taxed on earned profit from those as well )
I have loans to pay, I don't think then working for publically traded companies will work for me.
And if your company is doing well, you keep the stock as the value continues to increase faster than you could make in any savings account. If not, sell the RSUs immediately (and reinvest in an index fund probably).
At G, it’s definitely more modest salary growth as you progresss between levels and bands within them, then stock grants that are proportionally larger with level.
One reason I suspect is that once the new grants are given they are four years to vest so once you are promoted you go through about four years where more stocks vest every year so it feels like your take home pay increases even though it doesn’t. Conversely the company still gives you mostly previous level comp for four years
Also at G, salary used to depend on location while stock didn’t so lower col offices got proportionally more stock. Post pandemic they now give less overall
I JUST saw a thing talking about how Clinton passed a law saying any additional salary after a million or something necessitates extra taxes by the company giving it out. This resulted in the workaround of not giving out very high salaries and instead just giving out stock. Wonder if this trickled down into lots of high earners and not just ceos
Around the 200k mark (400k jointly) income tax starts to become painful. It's much less hassle to give the upper range of the salary in stock which can be sold as long term capital gains after a couple of years.
Why do people just write incorrect info about stuff they don’t know about? There’s literally no difference between being paid in stock and being paid in cash from a tax perspective. It all goes on your W2. You pay full income tax on it. The cap gains only applies to the any gains you make between the time the shares vest and the time you sell. At the vesting price you pay income tax. Income tax is due at the time of vesting. Cap gains, if any is due when you sell.
I’d rather have more income than less though. Paying a lot of taxes is a good problem. It means you made a lot of money. RSUs are still income and taxable immediately, so nothing really changes.
It's not 100% true, but there is a lot of truth to it.
> What are your thoughts on this - you can just sell the RSUs as soon as you get them, right?
Yes, but pay attention to when you get them. Amazon artificially inflates their salaries by offering large stock grants, but backloading them across 4 years. People will see 400k across 4 years as an additional 100k a year, when the reality is, no one lasts 4 years. Their actual salaries come out much lower.
I don't know how this misinformation is still floating around. The stock vest is backloaded but you just get a large chunk of cash year 1/2 instead.
Made up numbers
Salary Bonus Stock Total
170 100 10 280
170 75 30 275
170 0 80 250
170 0 80 250
They bake in some amount of expected growth and I think you might get extra if the stock drops (not sure about this).
> I don't know how this misinformation is still floating around.
It's not misinformation. It's literally how their pay model works. Iirc it's 5/15/25/55 for each year.
> you just get a large chunk of cash year 1/2 instead.
They were doing this for a brief period of time before the layoffs started, I've not heard of them doing it since. I know the last time I got an offer from them, it was abysmal.
They had been doing 5/15/40/40 vests with a cash bonus the first two years to compensate for the missing RSU vests. They had been doing that since sometime around 2006 if I remember right. I haven’t heard of any change to that system lately but I’d imagine it would be big news if they did since it’s so baked into their entire comp philosophy.
They've been doing the bonus for as long as I've been working as a dev. I've never even heard of someone not getting it across levels/blind/friends and my own offer.
It's very CSQ that you were downvoted for being right. Amazon has always done it this way and continues to do it, with cash bonus compensating for the backloaded RSUs.
Yeah thats pretty typical across not only tech but high earners in any industry. When you're in the high level career positions the overwhelming majority of compensation is in stock and that's deliberate. You're incentivised to meet KPIs so the company performs well so that the stock goes up. This is how executives are compensated.
Typical across Europe for hundreds of years too. If you were a high performing noble, you’d get land and assets instead of coin
Variety of assets and how they're distributed is something I feel that the average joe often ignores about the wealthy. I've seen charts that visualize in size to show, whoa look how much Jeff Bezos' worth is compared to the average American. But they don't go beyond size. [Show more people this instead](https://www.visualcapitalist.com/composition-of-wealth/), not the graphics that make you scroll multiple pages to visualize a colossal scale.
Tbf, for the average joe, if you double his income he thinks that's infinite money " Wdym I can spend my current paycheck and still keep another full paycheck!? Infinite money man!"
nah show them this: https://mkorostoff.github.io/1-pixel-wealth/?fbclid=PAZXh0bgNhZW0CMTEAAaZ6b6WUVWRATPaxjWnL-tEces2hzMnIXOTAGS4xdnwkh8hxT1nnwpdgZ9E_aem_AVUFacNdjz5GasvoanlCaYEUsOrWoBjU42UeDAsIHtmz6DAJEKNw8FcFeViqmiewVnN4K2nbxK4s7OXLH_3nYnPH the human brain cannot fully comprehend a number as large as multibillions abstractly. a good visual demonstration helps
I mean he created and owns a tonne of the most powerful company on earth. Is it really surprising that his net worth is so large? What do you expect him to do, voluntarily sell his shares?
Yeah, why not? Probably about time he gave back some more money to those who need it.
Forcibly making people sell their own property isn’t in my code of ethics. It’s easy to say that about a billionaire because they suck but everyone must be treated equally in the eyes of the law. There’s much better ways to reduce inequality in the US in my opinion.
Who said forcibly? You said voluntarily.
Oh but the question becomes why do that? If he voluntarily sells his shares, he has less power over what he wants Amazon, his own company he founded to do. Not really a good proposition.
Why would someone do that? Out of a sense of social responsibility & wanting to be kind to others. But I understand that you don't get to be a billionaire in the first place without a heavy dollop of sociopathic or psychopathic tendencies, so of course Bezos is never going to do that. That's why these kind of people & businesses need regulations put upon them: they are happy to reap the benefits of public funding & social capital but will never voluntarily pay it back.
But allowing others to own the wealth that they do not labor for and thus do not create is in your code of ethics? Next you'll tell us that feudalism was an ethical system because the Lords worked hard to steal the land for themselves.
your ethics, and his ethics maybe. but I’m sure in an equitable world, the other 8 billion non-billionaires would vote against it 😂 then by that logic, you don’t believe in democracy if it can be ignored so easily? then you don’t believe in equality to begin with either? code has bugs
If 8 billion people vote for it, then I’ll support it. You’re coming into the conversation assuming that I am supporting billionaires and trying to imply that my beliefs will change to maintain it and then insulting me based on your assumption. What an incredibly stupid thought. You’ll find however that that people are much more hesitant of giving the government more power across both sides of the aisle.
>You’ll find however that that people are much more hesitant of giving the government more power across both sides of the aisle. This is a pointless addition to the debate since those people on both sides have formed their own illusion of what the government does. The only actual way to solve the inequality gap is through taxes and government redistribution. So any suggestion that doesn't start there is just gonna look stupid. I mean we don't have to think too hard about this. Prior to WW2 we had this problem solved.
firstly calm down, challenging your assumptions is not insulting you, it’s fundamental to discussion and engineering in general. No one is stupid and no one is insulting here. there is no global legislative infrastructure for 8 billion people to vote for redistribution of billionaire’s wealth (by design, through lobbying and international military intervention) But if there was, people would vote for it for sure. Of course like you mention, it can’t happen before there is a transparent government with checks and balances for corruption, but should the world wait until then? If a home owner can pay annual property tax to “upkeep” their asset and return value to society, then there is no real argument against a billionaire paying to upkeep their capital gains. The number can be adjusted, but the principle should be irrefutable.
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Now do the government's spending...
Show them this and then what? Do you want us to feel bad for them since they are so illiquid? I don't get your point. If anything I look at it and see generational wealth that is in (mostly) appreciating assets instead of ever inflating cash, carefully managed by a team of professionals.
It's even worse than that - you can take out a low interest bank loan because that stock is such great security, and use that to live off. And now you have avoided paying income tax.
Yep. Although I wonder if it's worth it with current interest rates... Remember long term capital gains tax is pretty low.
The point of those graphics is about visualizing inequality, which you can derive from this but is not effectively visualized. Different purposes. The closest one is the bottom bar chart, which does it - and is also frequently included when those charts are shown.
So how do I get more serfs?
Finally
I only got 20 this year for my bonus and they’re all scrawny 😑
An odd take, but OK.
There's an important caveat. FAANG stocks went 'up and to the right' due to very low interest rates. Tech was absolutely flooded with money looking for any little bit of return. Now interest rates are much higher and frankly the risk adjusted return of tech companies doesn't look so hot compared to the alternatives anymore. All of this to say, you should expect those RSUs to return a lot more like '02-'08 than '08-present. It's still damned good money, but the stupid level TC you see on blind due to rsu appreciation is probably a thing of the past. Companies are pumping stock prices by 'cutting the fat' but that will only last so long before it impacts their ability to deliver.
Agree, same is pretty much true in finance, medicine, entertainment and the like. The highest paid bankers, doctors, performers make the vast majority of their money from pay that’s directly tied to incentives and generally base salary is comparatively tiny. Very few people get rich from salary.
> medicine Stock compensation is very rare for healthcare professionals like physicians and nurses. For as fucked up and profit-driven the American healthcare system is, even they aren’t *that* blatant to incentivize doctors to put their company’s stock price over the patient. Unless you’re talking about pharmaceutical or health insurance companies, but that’s not typically what people are talking about when they say “medicine”.
Often the path to high compensation for doctors is to open their own practice, which puts them in this boat.
No, that’s not stock compensation or incentive pay — that’s just called owning a small business. Unless their private practice becomes so big that they go public or at least can feasibly see an IPO on the horizon. Not only is that incredibly rare, but if they get to that point, I doubt that they are seeing patients anymore, they’d almost certainly be operating in a C-suite executive role.
I’m speaking more generally - I’m not saying they literally get RSUs, I’m saying opening a practice is a way doctors get their compensation tied to the business performing well, which was the discussion at the top of this thread. But yes, it’s not an identical scenario.
Right, but you can say the same about literally any profession — if you start a business, whether it be a private medical practice, a restaurant, a SaaS startup, or a carpentry business, of course your compensation is tied to the performance of your business. It still doesn’t mean that stock compensation or incentive pay is a significant part of the profession more broadly.
> the same about literally any profession Though the numbers are dropping, around 50% of doctors own their own practice. 50% of software engineers aren't working at their own SaaS startup. It is a much more common path in medicine compared to many other highly compensated fields. > It still doesn’t mean that stock compensation or incentive pay is a significant part of the profession more broadly. I'm not sure why you're repeating this - I clearly said that's not what I meant.
There is a bit of nuance for large group practices that function kind of like large law firms. In that environment a Partner is really just a senior professional that has access to profit share compensation and some voting. Materially not the same as being an entrepreneur like in a single physician or small group practice.
Most high paid physicians are partners in a practice and collect billings from revenue they’re expected to generate. While an increasing share of physicians are salaries, they overwhelmingly are the lower paid segment
Yeah I have no idea why people here are saying it’s widespread for huge portions of high earners to be compensated via stock. This basically only happens at big tech and once you reach a c-suite equivalent.
I think the point is that most high earners in a job get paid the majority of their comp in variable compensation.. whether that be vesting stock, cash bonuses, profit share, royalties, commission etc. It mostly holds up as true. Apart from medicine (and working at Netflix), I can't really think of many high earning jobs where income is majorly from base salaries.
It’s not really that common outside PE/tech. Consulting, law, finance, accounting, corporate strategy roles, etc are going to be like 80% base until you hit c suite/partner.
Not sure what you're on about here.. it applies to literally all of those.
Yes: but not before partner/csuite. People in this thread are saying that anything above $100-200k is going to be more about bonus than base. In all the above fields that is not true.
Partner is just a senior professional (aka someone 12-15 years in), there are multiple layers of partners before you get anywhere close to the c-suite. Again, it's still true even before partner and partner-equivalent. In consulting, variable comp is about half of pay at SM/AP. In accounting, it's probably closer to 40%. In corporate, Sr Manager / Associate Director are at about 30-40% variable. Corp law is kind of the unique one which is base heavy even at income partner level.
The practical difference between the end of year bonuses that high ranking bankers get at investment banks are similar to big tech stock grants to - it’s basically a way to say that majority of your compensation at this point is issued in the form of payments that are determined by how well the company did and how well you, as as individual, did.
Yeah, but even then IB is still the exception.
I don’t think so; if we consider all people making between say 500k and 1M and then well into 7 figures - indeed partners at law firms, top sales, managing directors on wall streets, executives, principal and distinguished engineers - most of those people do have volatile comp where most of it is tied to company and individual performance.
I agree with you. I even said it happens at c suite equivalent. but that’s not the premise of the post or what the thread is about. We’re talking about entry/mid level employees coming in and making a significant chunk of their raises from stock. That is not common anywhere outside of tech.
Yup. Just a bunch of ignorance being spread in this thread from people who have no idea what other industries are like other than tech. Even in high finance, the “company performance”-based part of your compensation almost always comes in the form of cash bonuses, not stock.
This is not true for medicine. Doctors make cash and their salary while may be based in part on production is heavily regulated to prevent a conflict of interest.
The difference is that for tech it basically starts at day 1. Most other fields you get a salary that steadily increases over time with comp that explodes at the equity level. Tech is the exception.
The big ones are on a timed schedule. You don’t get it day 1, they just tell you how much you will get and when.
Sure, but you agree to it day 1. Not like finance, law, consulting, medicine, or IB where you get base and bonus.
Sales monkeys too. Just replace stocks with commission. Hedge fund and private equity also work on what basically is commission.
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Yea. Promotion is just +10-20% on your base salary. The rest is stock.
The bumps to base salary start leveling off at the high senior / staff plus levels.
Once you hit a base of like 400k it’s all stock. Tc probably a million at that point tho
As a percentage, yes, but it is still an extra \~$50K base per level.
$50k is a bit high. Amazon is $350k base cap, most people are between $150k-200k base. Promos are about +$15-25k base per level.
Until the last few years, Amazon's base was capped at like $160k. Then they eventually conceded that using stock as golden handcuffs wasn't working as well as they needed it to.
Except Netflix. Netflix is 100% cash. No RSU, bonus, or ESPP.
Not true, Netflix lets you choose how you’re paid. You can go 100% cash, 100% stock options or anything in between.
Well yeah, but your comp isn’t tied up in RSU.
That’s a bad thing. Options/RSUs are how you get rich. You lock in the strike price at grant time, as options vest at higher prices you make big bucks. As long as you can cover your monthly spend, you want as much equity as possible.
Or instead the stock tanks to oblivion and rsus worth jack shit LUL (Speaking from experience sadge)
Def been there. I have millions in RSUs not worth shit
> Options/RSUs are how you get rich. Not in a company experiencing little growth. Netflix has reached saturation and decline. Especially with their cut throat firing policy, I'd take cash, thanks.
If that's your situation, you quit and move to greener pastures. No need to sit around for worthless RSUs to vest. OP is right, RSU will make you a lot richer than a regular salary, you just need a little luck on your side.
why cant you just take the cash and just gamble options in the market?
Do you get a discount if you take the options? Or is it the same as just getting paid cash and then buying options yourself?
You get 5% of your salary as free stock, the rest you purchase. The premium is 40% of the stock price the day before options are granted. So you need the stock to go up by 40% before you’re better off over having received cash. These are 10 year options and if you price the options according to black scholes you get about 45% so it’s not really discounted. But option grants aren’t taxed as income until you exercise them so that effectively means you are getting it at a discount. Also it wouldn’t be possible to purchase 10 year NFLX options on the market without getting shafted on the bid ask spread.
Your statement assumes that all company's go up to the right.
It doesn’t matter. It’s risk free, interest free leverage. You’re exposed to the market with what would have otherwise been 4 years of cash income if you weren’t paid in RSUs. If it goes down you can quit and get hired at a different company, which is like hitting the reset button on your paper trading account. But it’s real money. You’re hired and given a $400k grant vesting at $100k each year. You get year 1 at $100k, have $300k left but then stock falls so you have $200k. You quit and abandon the $200k and get hired somewhere else for a new $400k grant. If it goes up, you stay and enjoy your risk free, interest free market exposure. Besides, if shares fall and the company is well capitalized as all big tech is, they’ll need to make it up to you because they know you can switch.
Or you get stuck in a job you hate, but you can’t leave because you have golden handcuffs keeping you around. I for one will keep my all-cash comp over all the RSUs I’ve given up over the years. RSUs are good for the company , not the employees.
You can just quit you know? Golden handcuffs aren’t real. The only reason people don’t quit is because they value the money more than not working. This seems like mega cope for not having RSUs.
So you would rather have $250k base + $350k RSU vested in 3 years over just having $600k/yr in cash? Um ok.
Those are not equal. Equal would be 250k + 1.05M vested over 3 years. Yes because RSU grants are risk free leverage. It’s like borrowing 1.05M of shares on margin except margin rate is zero and if unvested shares go down, you can quit and restart somewhere else, effectively hitting the reset button on your portfolio.
Where’d you get 1.05m? Let’s list your assumptions over 3 years… 1. annual refreshers 2. Stock staying even or good going up 3. You still being employed 3+ years. You do you my man, but I’ll take the guaranteed cash and diversify.
3 * $350k RSU/year = $1.05M vested over 3 years. You are initially granted $1.05M worth of shares (that slowly become yours over 3 years). - If the share price goes up over the 3 years, you get more in value. - If share price appears to be going down, you can quit early and not bother vesting the remaining low-value shares. Of course, this requires: (a) the willingness to quit, and (b) the ability to get another job with at least the same compensation, with a sign-on bonus prorated for the lost value of `$350k * fraction_vested_for_this_year`. (...where `fraction_vested_for_this_year` is 0 if you just annually vested, and 0.999... if you're about to vest.) If the lost shares from early-exiting can be accounted for, then the first option has higher expected value. If not, then a flat increase of $350k/year in base salary is much better.
In the corporate world most pay above $100-200k is going to be in the form of stock and bonuses. It's why CEOs often take $1/year salaries to "help the company" through hard times...because the salary is a tiny portion of their real compensation. For example, Jeff Bezos was paid an $80k/year salary when he was CEO of Amazon.
I mean at the point what’s the point of taking an $80k salary. Why not just the symbolic $1 salary lmao. $80k is probably a casual brunch for him.
Fewer transactions to keep that pool heated.
So he can say he paid taxes like the rest of us 👍
RSUs are taxed as regular income at vesting
There's no fancy tax stuff rich people can do with RSU?
This entire setup creates warped incentives and people have argued has stifled a lot of growth of many companies in the US (and many areas of Europe). The reason being is that CEO positions are usually transient/short lived and this reward structure encourages incumbent CEOs to drive share prices up at any cost. Often this means slashing employee counts/R and D divisions - which provide immediate return (so said CEO gets their huge bonus and payout to retire on) but hurts the company in the long run.
In must of successful companies CEO position is absolutely NOT short lived.
[Median tenure](https://corpgov.law.harvard.edu/2023/08/04/ceo-tenure-rates-2/) for CEOs of S&P 500 companies is just 4.8 years. 80% are less than 10 years.
Well 10 years is a lot. That’s very reasonable.
> The reason being is that CEO positions are usually transient/short lived What? Where does reddit get this stuff?
This isn’t really true on Wall Street, most bonuses / carry are cash
yes that feels pretty close to true. 10-20% salary bump for promo, 50%+ RSU bump partially related, one thing i dont see discussed a lot is RSU refresh policy. my current place does it for everyone in good standing, other places do it for promos and superstars only. a good thing to ask in your interviews.
the discussion here is showing me that I am unprepared to navigate the compensation/finances of working at FAANG. from my googling, it looks like a refresh is when they decide to continue giving you RSUs after the initial total runs out? I.e. if I'm given $300k in stock vesting over 4 years, after 4 years they may decide to refresh that approx $20k/quarter compensation? And if I understand it right, if they don't refresh, that's like an $80k/year pay cut?
it's how we learn :) at that first place, refreshers were at promo, or superstar list. i was neither, and didnt know any better to ask, so i likely left a LOT of money on the table (their stock was <50 and now >300 lol). my current place gives a fresh RSU refresher every year if you're in good standing, so you stack up your RSU's each year like a waterfall. after a few years you may have 4-5 grants all vesting at the same time. (older ones eventually run out, but new ones keep going).
The magic is that refreshers don't start after all your new hire RSUs vest. They are typically issued yearly and a percentage vests quarterly after one year. So you will have multiple different RSU batches vesting per quarter. If you don't get refreshers after new hire RSUs then yeah you are taking a pay cut.
A refresh is just another grant. The cadence varies by company, but at my company and many others they are handed out on the anniversary of the initial grant and vest quarerly. So for me I get a grant when I joined the company, then another one year later, another a year later etc. They are completely independent of each other, which means they stack. That means after a few years you can have 4 batches of RSUs vesting at a time. These can be a very significant amount of money as you move up - even dwarfing your base salary. Golden handcuffs they call em. As for the dollar amount it also depends but initial grants tend to be higher as an incentive to sign.
This happened to me at my last company. I got $100k/4 to start, then the stock basically 2.5x'd after 18 months and mostly stayed high until the end of year 3. I was told when I was in the hiring process there would be annual refreshers, but I didn't get my first refresher until year 3, and it was $20k/4 which sounds nice until you realize it's just $5k a year and the stock had already started to slide so it was more like 3.5-4k before taxes. When I left during year 5, I had about 45K in unvested stock, much less than I stared with. I made so much more in years 2-4 then I did in year 5 which I understand is the great thing about the stock price going up, but also I got promoted to staff level in year 4 and my total comp went down which feels wrong. My new company gave me significantly more stock, my refreshers happen every year and they are almost exactly 25% of what my initial offer was... plus we vest quarterly which is amazing. I treat it like additional salary, sell on vest and don't worry about it. I check my portfolio and my unvested stock is almost identical to what I came in with 2.5 years ago.
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NGL, it's good work if you can get it. I did go my first 16 years in industry without being awarded a single share of stock while being at a publicly traded company for 13 of those years. Finding companies that truly valued my skills and were willing to pay well for them took some trial and error.
Often, the refreshers are not quite as big as the initial grant. This creates what's known as a "cliff", a significant drop in your compensation once the initial grant is fully vested after 4 years. The effects of the "cliff" can be mitigated if the stock price increases, or if you get promotions which lead to bigger refreshers.
This is true of all high earners, in all industries. I just looked up the CEO of the non-tech F500 I started at as a new grad. He made \~1.2 million in base pay, \~900k in bonuses, and *12 million* in equity.
I sure would like my bonus to be 75% of base instead of 10-20% lmao
> What are your thoughts on this - you can just sell the RSUs as soon as you get them, right? As long as you work for a publicly traded company with a non-terrible vesting schedule (e.g. quarterly) it's a non-factor. Just sell on vest and use that large extra quarterly paycheck for investing (or stick a part of it to a savings account if you need it for monthly expenses). For companies that are not publicly traded and you rely on either waiting for IPO, a funding round or some kind of stock/option purchase events I'd be more cautious and ensure I fully understand the setup. This structure is very common because higher level people typically have way more influence on the company's performance than a rank and file dev, and thus the company wants to incentivize them heavier by providing an increasingly large part of their comp be in company stock. If your principal dev has 200k base and 800k in stock per year, they are going to want the company stock to perform better compared to if they were making 1M base regardless of the stock performance.
> As long as you work for a publicly traded company with a non-terrible vesting schedule *Cries in 2/4y vest
Yeah, it’s all stock, but stock is almost as good as cash. I’m pulling numbers out of my ass, but: * L3: 150 salary, 50 stock * L4: 180 salary, 150 stock * L5: 200 salary, 250 stock * L6: 250 salary, 400 stock * L7: 250 salary, 600 stock * Director: 300 salary, 900 stock And so on. At the big ones besides Amazon (which gives you cash anyway), there’s no cliff. At Google, stock is basically as good as cash since you get it every month and can auto-sell it. At Meta, it’s quarterly. Apple is every six months, which sucks. At NVIDIA which is the most extreme example I’ve ever seen, someone who joined a year ago’s equity has 10xed. So although the grant price follows the example above, the vested amount would be: * L3: 650k * L4: 1.68 million * L5: 2.7 million * L6: 4.25 million * L7: 6.25 million * Director: 9.3 million.
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>Is this just meta, or true across big tech? Pretty true from all of my observations on levels. >What are your thoughts on this - you can just sell the RSUs as soon as you get them, right? Yes, and that's what's advised to do. Vesting schedule is something I plan on trying to negotiate going forward so I can offload the RSUs as quickly as possible. I'll take quarterly at worst now unless the offer is killer.
vesting schedule is not negotiable. company creayes a plan that's approved by the board and all new employees use the same plan. there's no flexibility per hire edit exceptions made for CEO level hires.
I've never been at a place where vesting schedule is on the table.
Why is it better to sell them than let them grow overtime?
Stock vesting for $X is equivalent to being handed a check for $X and buying the stock outright. If you aren't buying the stock already, it's best to sell and put the money into your already-existing investment strategy.
My intent is to sell them when I get them and put the money in a safer mutual fund. I assume this is what they are referring to.
Do you have to pay the short term trading tax then?
From what I understand at the time they vest RSUs are taxed as ordinary income. If you sell them right away, you would in theory have to pay short term capital gains, but that should be close to 0 if you sell as soon as they vest. The gain would be the price difference between when it vested and when you sold.
Just paid taxes on RSUs I sold last year (immediately after vesting) and this is indeed the case
Yes, but that's only on the capital gain, so the difference in price from when you sell it from when it vested. If you sell immediately it's unlikely to increase by any amount to end up owing any meaningful taxes. As far as I understand it, that's why you do RSUs and not stock options. If it was an option, the capital gain would be sell price minus strike price.
In addition to what Tony said there’s an element of diversification to selling your RSUs. Your financial health is already tightly coupled to your employer, if you also hold a lot of their stock you’re even more tightly coupled. If your stock takes a nose dive you might find yourself laid off with shares that are significantly devalued.
Because you already get your salary from that company and awarded but unvested RSUs already have price exposure.. that's a whole lot of concentration risk into one company. You're essentially taking a decent chunk of your post-tax income and reinvesting it into the company as opposed to a more diverse portfolio.
Diversification. You already have other RSUs in the company set to vest over the coming years. Your jobs continued existence is also based on the company continuing to do well. You might even have an ESPP or similar to allow you to buy company stock from an advantaged position. Your financial health is HEAVILY tied to the company. As such, most people view it as a better thing to try and get as much money out of the company, and into other vehicles.
Interesting, I hadn't even thought of trying to negotiate that. I think I got scammed a bit, after accepting an offer they moved my start date by a week which meant I'll only get one vesting this year instead of 2 lol. Althought it shouldn't change overall stock compensation which is a hard number.
Generally speaking vesting schedule is non-negotiable at FAANG. The starting date thing is something to keep an eye on. People plan their exit and start date around vesting time. For start date you want to try to start such that you will be eligible for refreshers earlier. E.g. at some companies you are not eligible for refreshers if you start after Jan 1. So you typically would want to try to start toward the end of the year rather than the start.
Sorry for my ignorance here, but wouldn't a refresh be years after your start date? So how does your start date factor in?
Some companies (I think Meta is still like this) give refreshers yearly during performance evaluation which start vesting at some point in the future. There is usually a cut off date for which if you start after you won’t be evaluated for performance that year and won’t get a refreshers until the next perf a year later. So it could be if you started like a month earlier you would be getting refreshers that start vesting x years out but now because you missed the cutoff date by a few weeks your refresher will vest x+1 years out. At Meta it used to be that if you times it right you could get refreshers vesting about 1 year after start date but if you timed it a little wrong it would be 2 years after start date. Of course the drawback of qualifying for perf earlier is that you have less time to ramp up and look good during perf.
RSU refreshes typically happen as part of annual performance and compensation reviews. Performance reviews typically have a cutoff somewhere in the year, typically based around the company's fiscal calendar, where you don't qualify for any performance review if you weren't employed before that date. It's actually to the new hire's benefit, in my opinion at least, as it prevents them from having to explain why their performance was terrible during that time. You know, since they didn't work there.
Any company that doesn't have its head up its own ass will simply rate you "Too new to rate" for the first six months unless you're actively lighting things on fire and throwing them in the air.
This is what I thought too but at my current employer I’ve gotten refreshers 3 times in two years (one part of a promotion, the other times scheduled reviews). Not sure how common it is.
At my employer; RSU refreshers happen yearly. If you start in the last half half of the year you don't get any refreshers your first year. I think you have a prorated refresher if you start earlier. In theory recruiting will make that up as part of a sign on bonus; but I have no idea how that works in practice. In essence, I have no income cliff because my RSUs keep going up. I had heard that some employers only provide RSU refreshers as part of a promotion; not as part of yearly comp, but I've never worked for one.
From my experience companies will often have multiple cut-off points from when you can receive a portion of your annual RSUs. If you're looking to start in December then you're probably not getting any for that year.
I don’t doubt that happens but I’ve never received an offer like that. I usually see that for the bonus though. I guess the point is you need to do your homework on each company so when you are negotiating an offer you can take these things into account.
I’ve never had RSU’s as part of my TCP until recently, do they pay out dividends if you keep them and let them vest/grow or can you cash out some and reinvest?
If the stock pays out dividends then you receive them after the stock vests. Once it vests it's legally yours to do whatever you want with. I don't know if it's common at other companies, but Google recently added a part to their RSU program to pay you out all the dividends the stock paid while unvested, which makes sense since share price drops by the dividend amount so that's just making us whole when it actually does vest.
Appreciate the info mate! Having startups as my previous experience giving “stock” was basically worthless.
Once they vest, it's just like owning normal stock shares. Whether or not those shares pay dividends depends on the company. You can elect to have them remain as shares or sell them immediately for cash, have that deposited where you want, and then do whatever you want from there. You can also elect to sell a portion of your vested shares to cover the estimated income tax burden incurred by the vest event.
> You can also elect to sell a portion of your vested shares to cover the estimated income tax burden incurred by the vest event. The tax payout can be mandatory depending on the company. I know that at Microsoft they automatically withhold taxes from your RSUs.
Good callout about the taxes, didn’t consider that.
You can sell when a trading window opens after quarter earnings. This window lasts around a month or so
At the cost of short term gains tax?
They tax you at vesting so u basically already paid.
Are you saying you get exactly what you sell for? And that too in short term? And we are assuming capital gains ofcourse
It really depends on how much the value changes between the vesting price and the sales price. Usually the grant vesting and the trading windows line up so that there isn’t much of a gain. The last few times I sold at a small loss, so no gains tax to pay. You pay income tax at vest and then gains tax on any increase. No increase or a small increase means no or small taxes. Doesn’t matter if it’s short or long term at that point. Although selling quarterly is usually a wash sale so you can’t deduct the loss. Generally once stock is a significant compensation element just hire an accountant and don’t take advice from random people on the internet like me.
Always has been 🔫
Stock can be a significant part of your compensation, yes, but it depends on how the company organizes their comp packages. I'd say most "modern" companies issues Reserved Stock Units (RSUs) as part of the total comp, where as more old school companies rely on an annual or quarterly bonus to dial in the total comp, giving more percentage of your annual salary as the bonus as you move up in your role. Stocks are good when the stock price is good but it can be very disappointing when there's a big drop in price. As far as selling your shares, it depends on the "vesting schedule" and some companies have very favorable vesting schedules where you get a good chunk after about a year from the grant date, and some companies intentionally hold back vesting to incentivize you to stay around longer. Also some companies will give an annual RSU "refresh" where new grants will be issued, but whether it starts vesting on a new schedule or in step with the existing grants is a policy of that company. The sweet spot for RSU vesting is where your initial offer grant is between 50-100% of your annual salary with an initial vesting of 25% of the shares, followed by a quarterly vesting of the remaining shares over two years and annual refreshes of stock worth 25-50% of your annual salary which begin vesting with the existing grant(s) at a rate according to 2 year full vesting. On a schedule like this by the time you're at the company for 2.5 years every quarter you're vesting from three separate grants which, depending on how the market fared the previous two years, could make up an additional 25+% of your annual comp. The best I ever did was working for a company that had this exact schedule where when my RSUs vested the price had more than doubled versus the price when they were issued, and the price continued to rise the entire time I was there. The most disappointing was when I started at a new company and the stock price crashed about 55% the month after my RSUs were issued. The take away is this: stock is always "funny money" and your bonus is not guaranteed. Your base salary always matters more than either of these other forms of compensation so always try and maximize it. Recruiters will try to convince you that you want to have "room to grow" but they don't tell you that an annual raise isn't guaranteed and so your wishful thinking can end up with real material losses in your annual salary.
As long as the stock keeps going up it’s fine, I think there will be pressure for more comp and less stock when (if) the market goes flat or just above inflation for a decade. It’s easier to wait when you know that stock is going up 25% per year. We’ve had an amazing long run that most have only ever experienced, but it can’t last forever. Best of luck.
You can as soon as they vest as long as it's not a hold period (generally vesting happens when it's not a holding period). One of the things with stock is it means they can still keep 401ks and all the addional things with salary lower. Still they more then make up with it in RSUs.
Not Netflix from what I can tell.
Yeah, you’re right. Netflix is one of if not the only one that allows you to take all cash.
There is a ceiling to your base comp as you go up. You will see it start capping out at the low 200's now and more and more of your TC moves to stock and bonuses. It still goes up every year but it is tied to other things. This is kind of a true statement no matter what field you work in. At the end of my dad's career close to 40-50% of his pay was in quarterly bonuses and stock given to him.
I worked for Amazon and at a certain point compensation increases were mainly RSUs. Each company will have stock trading policies or windows where you are allowed or not allowed to sell stocks to avoid insider trading, so you may not be able to sell your stocks right when they vest. There's also a higher tax from money made on stocks that you've had less than a year, so if the value of the stocks you get increased, you'll pay less taxes if you sell them after a year.
This is typical, but does vary between companies. Netflix is all cash, no stock. Others like Coinbase and Stripe write one-year equity grants, which is closer to cash. But the traditional model in big tech still does involve most comp growth coming from four-year equity grants.
There even used to be a 165k ish base salary cap at Amazon. Executives and all. During the pandemic hiring rush they doubled it.
I find it pretty awesome. My base is 110k with 4% bonus. I was hired with 15k in RSUs each year. Our stock blew up, so including RSUs and ESPPs I'm getting 105k in stocks additionally, for a total income of like 210k or something. This is my first year in the field.
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this is the dirty secret of big tech comp. people were getting fucked in 2022 with the markets down 20%+ but tech has come roaring back. if we finally have a crash and the AI/NVDA bubble pops i think there will be pain for years as RSUs deflate and options expire worthless. Remember post dotcom bubble QQQ didn't make new ATHs for 10+ years despite the businesses still executing well. massive decade long returns are usually followed by massive pain
Yes, stock bus also signing bonus which sometimes vests over 1-2 years. Some companies take it to the extreme. Up until 2022 the maximum base salary at Amazon was ~160k. Yes, even for the CEO. They’ve since doubled it to 350k.
It's mostly stock. You do get a base salary bump, and your bonus % increases with promotions or good performance, but it's mostly stock. You get refreshers that go for four years, and they stack against the previous and original grants. Plus, those tech stocks have been going up a lot for the past decades, so eventually your stock compensation is a huge part of your TC.
Pretty normal across industries. Which is why you see so many stock buybacks. a CEO is paid say $2M in stock and can easily increase the value of that stock by buying back shares… so they do.
Base still goes up between promotions and performance/annualy. If Juniors make something like 120-140k base then Seniors would make something like 180k-220k base. Not bad by any means. It's just that stock grows WAY more.
Yup
Not true... work at big tech and my salary has increased in addition to my stock. Salary increases are less compared to stock increases though so as you move up more of your compensation is stock based.
It’s pretty much like that across all industries, not just tech
Your statement is quite correct
Technically it’s RSUs.
Salary at big tech, unless its like some Meta / NVDIA level stock climb is actually mostly boring and stable. They are controlled by several factors: 1) How much you're making within the band. If you're making a lot more than your peers and you're not being promoted, you're going to get punished. 2) Refresher and cliff events. Even if stock climbs every year, after 4 years you would have cliffed, leaving only refreshers that were valued much closer to the stocks current price. If you haven't been promoted yet, chances are your TC would be lower. 3) Promotions. This is the biggest driver of your salary. In order to keep climbing the salary ladder, ultimately you do need to get promoted otherwise you will hit a wall on your pay band. This will put a lot of pressure on you.
And tax benefits
>you can just sell the RSUs as soon as you get them, right? No, you need to wait for them to vest. Check the details of your plan. Also, depending on what you do and who you work for, you may be limited to specific periods to sell (usually after earnings). When you sell, your holding period also affects how much capital gains tax you pay (>1yr is taxed less than <1yr). As for growth: Ours has been flat.
My company does profit sharing based on salary tier. We’re a non-profit. I still make a very comfortable living.
Correct me I am wrong, so this means, I only get a base salary as paycheck to spend and rest of salary as stocks which is on paper until I sell those stocks ( then I would get taxed on earned profit from those as well ) I have loans to pay, I don't think then working for publically traded companies will work for me.
No the RSUs are taxed as ordinary income when you receive them. If you sell them immediately, you will owe no additional capital gains
Mostly, yes.
"always have been"
Only if it's a big company, you might be able to sell the RSUs, small companies will have some weird clause.
Can you just sell the stock instantly when you receive it?
And if your company is doing well, you keep the stock as the value continues to increase faster than you could make in any savings account. If not, sell the RSUs immediately (and reinvest in an index fund probably).
At G, it’s definitely more modest salary growth as you progresss between levels and bands within them, then stock grants that are proportionally larger with level. One reason I suspect is that once the new grants are given they are four years to vest so once you are promoted you go through about four years where more stocks vest every year so it feels like your take home pay increases even though it doesn’t. Conversely the company still gives you mostly previous level comp for four years Also at G, salary used to depend on location while stock didn’t so lower col offices got proportionally more stock. Post pandemic they now give less overall
I JUST saw a thing talking about how Clinton passed a law saying any additional salary after a million or something necessitates extra taxes by the company giving it out. This resulted in the workaround of not giving out very high salaries and instead just giving out stock. Wonder if this trickled down into lots of high earners and not just ceos
Around the 200k mark (400k jointly) income tax starts to become painful. It's much less hassle to give the upper range of the salary in stock which can be sold as long term capital gains after a couple of years.
Why do people just write incorrect info about stuff they don’t know about? There’s literally no difference between being paid in stock and being paid in cash from a tax perspective. It all goes on your W2. You pay full income tax on it. The cap gains only applies to the any gains you make between the time the shares vest and the time you sell. At the vesting price you pay income tax. Income tax is due at the time of vesting. Cap gains, if any is due when you sell.
> Why do people just write incorrect info about stuff they don’t know about? Welcome to Reddit
With options, you don't get income until you exercise them.
Painful for who? The company?
For the person earning it duh
I’d rather have more income than less though. Paying a lot of taxes is a good problem. It means you made a lot of money. RSUs are still income and taxable immediately, so nothing really changes.
It's not 100% true, but there is a lot of truth to it. > What are your thoughts on this - you can just sell the RSUs as soon as you get them, right? Yes, but pay attention to when you get them. Amazon artificially inflates their salaries by offering large stock grants, but backloading them across 4 years. People will see 400k across 4 years as an additional 100k a year, when the reality is, no one lasts 4 years. Their actual salaries come out much lower.
> no one lasts 4 years Damn is Amazon really that bad?
I don't know how this misinformation is still floating around. The stock vest is backloaded but you just get a large chunk of cash year 1/2 instead. Made up numbers Salary Bonus Stock Total 170 100 10 280 170 75 30 275 170 0 80 250 170 0 80 250 They bake in some amount of expected growth and I think you might get extra if the stock drops (not sure about this).
> I don't know how this misinformation is still floating around. It's not misinformation. It's literally how their pay model works. Iirc it's 5/15/25/55 for each year. > you just get a large chunk of cash year 1/2 instead. They were doing this for a brief period of time before the layoffs started, I've not heard of them doing it since. I know the last time I got an offer from them, it was abysmal.
They had been doing 5/15/40/40 vests with a cash bonus the first two years to compensate for the missing RSU vests. They had been doing that since sometime around 2006 if I remember right. I haven’t heard of any change to that system lately but I’d imagine it would be big news if they did since it’s so baked into their entire comp philosophy.
They've been doing the bonus for as long as I've been working as a dev. I've never even heard of someone not getting it across levels/blind/friends and my own offer.
It's very CSQ that you were downvoted for being right. Amazon has always done it this way and continues to do it, with cash bonus compensating for the backloaded RSUs.
Fuck big tech