How should I calculate the value of RSU? Assuming that I was assigned 50 RSUs when the stock price was around $1900. In the first year, I will get 5% of these stocks. So at the end if first year, I will get 2.5 RSUs. Assuming that the cost of Amazon stock is just 1500$ at the end of my first year, am I able to just get $3750 (2.5 times $1500)? I am really confused how much money I get when I encash my RSU when it vests? TC: 120K (not amazon)
When your stock vests, you now own the stock. You can sell it at current market value at the time and keep the cash, or keep the stock. Note you are responsible for taxes either way.
So if the stock price falls drastically (due to recession), then would Amazon compensate the loss due to stock price going south? For example if I get 50 RSUs (when the stock price is $1900), and when the stocks vest the price is just $1000 (2.5 stocks in my first year). At the rate of $1900, I should get $4750. But due to drastic fall down of stock price to $1000, I will get only $2500, a loss of $2250. Would Amazon compensate $2250 at the end of the 1st year?
I don't think so. They might take it into account in your comp going forward, but you kind of know stocks go up and down when you accept the offer.
Also take into account taxes
First, the number of rsu you get are rounded down and the difference added to the next cycle. So, considering 50 rsu you’ll vest 2 the first anniversary and 8 the second one (15% of 50 -> 7.5 + 0.5 from the first year) Then they will sell enough stocks to cover taxes and give you the difference in your paystub... so from the 2 rsu that you vest you get only 1 stock and extra $1,400 in that month’s salary.
Also, about your question inside the reply, no, Amazon will not compensate immediately if the stock drops, they might give you extra stocks to cover the vacuum in their calculations of 15% appreciation. Mathematically their approach is to keep you leveled for 4 years, let’s say you signed for base of 120k and 50 rsu plus 40k first year sign on and 30k for the second year. To simplify, at $2,000/stock then you get: Y1: 120k base, 40k sign & 2 rsu -> tc 165k Y2: ~122k base, 30k sign & 8 rsu -> tc 168k Y3&4: ~125k base, 20 rsu -> tc 165k?? So their model works only if the stock keep growing at least 15% per year. Ergo, if the stock do great, don’t expect refreshers; if does poorly, they will add rsu to your next year batch.
Thanks Microsoft for the explanation. How would I know the RSU base price during the offer? Referring back to your example you used $2000/stock. Would they mention the stock price (they considered while allocating the RSUs) in the offer letter? I heard that they will only mention the number of RSUs and not the price per RSU they used to calculate the TC.
Same question. 😢
For the longest time, new hires at Amazon worry about the what if scenario when AMZN stock value goes down drastically. If it does, hasn’t happened yet, then the company will make you whole during the next annual cycle by issuing more RSUs. When calculating compensation, increase the stock price by 15% compounded annually to calculate the $$ you will get when your stocks vest minus taxes (25+%).
You can't get half stock bruh