If Airbnb were to go public before any of my RSU’s vest, no shares would be sold to cover taxes is that correct? Curious how that typically works as they’ve already told us shares will be automatically sold. But they wouldn’t sell unvested shares right? Anyone experience this before?
A lot of companies grant the shares at IPO, even when we “vest” before then so we don’t end up with huge tax bills we can’t pay. Downside is you have the golden handcuffs until IPO
Doesn’t make sense. Please elaborate.
At WeWork for example, unless there is a tender offer or liquidity event, ordinary employees have no means of selling a part of the RSUs that vest to pay for taxes, so vesting really only happens at IPO or tender offer. Hypothetically I vest $100k worth of shares a year, I would probably owe $40-50k worth of federal, state, and local taxes because the shares I vested have value to the IRS. Most people would not have that kind of money for taxes unless they can sell those shares. At WeWork: Year 0 - started new job that grants 100 shares a year Year 1 - 0 shares owned, (100 shares on paper) Year 2 - IPO happens, 200 shares vested and granted, 40% is sold for taxes, 120 shares owned
Taxes? No. New shares will be issued and that‘ll devalue your shares. You pay tax at vest.