Analyzing Netflix offer
Can somebody help me analyze the following two offers? Netflix, all-cash $500k Lyft, base: $200k, $25k sign-on and 20k RSUs While Netflix all-cash number is great, you end up paying almost half of it on taxes. Their supplemental allocation is not necessarily discounted options and doesn’t yield any gains unless the stock goes up by 40% or more. https://benefits.netflix.com/united-states/financial
It’s not like you don’t pay taxes on RSU or sign on?
What does 500k all cash mean? 200k base + 100k bonus over 3 years?
Which position is it ? What’s your yoe ? How was the interview ?
Comes down to how much you believe in Lyft and its stock. I would take the guaranteed $500k from Netflix. I think there is more downside risk then upside in Lyft. Ask your self if you got paid $500k a year would you put $300k into Lyft stock? Most people would say no....
Good point. So, you would just put post-tax dollars from Netflix in a diversified portfolio? Is the supplemental allocation really a benefit from Netflix? I have trouble understanding why I would do that. The only way to make money is for NFLX stock to go above 40%
Historically, the stock has massively beat the 40% cost. However, that may (or may not) still be the case in 2019+.
You're gonna kick yourself when Lyft stock hits $100! 😂😅🤣😭
Nobody can predict the future and if I have two choices, I would rather make the decision based on today’s number rather than speculative ups or downs
Optimize for today then and go with NFLX. Their compensation is tough to beat because it gets deposited to your bank account every 2 weeks.
Position and YOE ??
While you have to pay tax either way, when you invest in Netflix options, you can defer your income. Essentially using the income tax for investment up to 10 yrs. That's same incentive as 401k. And you don't believe NFLX can at least double in 10 yrs, you shouldn't join the company. You also get 5% extra of your salary for free options BTW. So that's 525k offer. Last but not the least, always join a company that's No.1 in the industry if you have the choice.
Totally agree. But why do they charge that 40% upfront to let employees buy the options? I wish I could put my pre-tax dollars to exercising of options instead of this extra 40%. Curious how they came up with the 40% number
It's actually a discount. You can check at the money leap option. You probably need to pay 40% premium for 2 years call at the money. So Netflix is giving you 8 extra years and tax defer advantage.
Why does nobody in this industry understand how RSUs are taxed?
You have to pay the same amount of taxes on RSUs.
Only if you sell within the year...
@lilbity: you are confusing tax on vesting vs capital tax on selling the stock. Tax on vesting gets taxed as regular income.