Would you rather have a high all cash TC or comp + RSU equivalent? What do you think would motivate you more? I personally think stocks are more motivating. Would like to hear from Netflix folks!
Comp + rsu because if you’re at a company who’s stock is going up, you’ll make more than initially given. You’ve basically bought the stock at the price it was 4 years ago and don’t pay until you get the stock.
Or it can crash suddenly 40% right after grant and take a year to recover. Apple employees who received large grants before the last plunge would understand how this feels. Cash is king. Only narrow exceptions to this rule.
Yeah well that’s why you don’t join companies who’s stock is going to crash. But it’s always a risk.
Straight cash homey
Netflix provides an option to buy stock options using pre-tax salary. It's like Google pays you the sum of salary+RSU and allow you to buy RSU using any percentage of TC.
Not the same. RSU has value as long as the company exists on the stock market, while options can be worthless if it doesn’t go up certain percentage(which has been the case for our recent grants).
Netube, you are correct that options have higher variance than stocks. You are incorrect that options are worthless when the market price is below the strike price. This only becomes true when the option window has dwindled to zero. That's probably what you meant - just clarifying for others.
True, but it's your choice at the end of the day. And it does have the advantage of tax defer on gains.
I came from Google. Main problem I had at Google was comp falling as old stock grants vested and newer were granted at a much higher pay.
But that is because you had an unusually high pay because of stock appreciation which wouldn't have been the case if you had a fixed comp.
@Uber Google comp was competitive while the stock was growing. Once it plateaued Google comp became low. You can notice it if you read Blind for years or talk to Google employees. Basically, Google comp was designed around stock growth. As an employee, it is really frustrating when your comp is cut due to things beyond your control.
This question is difficult to answer. Are we talking 400K cash over four years vs 400K stock granted upfront but vesting over four years? Then obviously the stock, but only because it's worth more. If it's 500K cash vs 400K RSUs or whatever it takes so that have equal expected value then of course cash is better.
Nonsense. $100 in NFLX stock option in 2012 became $500 in 2013. It's all about timing.
Duh. If it goes up a lot, options are worth most. If it goes up a little, stocks are worth most. If it goes down, cash is worth most. That's just definitional.
I like the Netflix system of paying lots of cash. There are no gimmicks, no math, no weird cases where your comp goes down despite high performance, no weird cases where they withhold raises from you because stock has been doing well. Cash is simpler for both sides.
Is there a path for non-rock-starts to get into NF?
TC all the way. Best part about Netflix is that you can buy into as much stock as you want.
Gives you the most financial leverage. You decide your own risk appetite. Most sv companies are doing the betting for you.
Your forgetting that Netflix tc doesn’t mean you get 0 equity. Your equity share is upto you. You can do 100% options if you wanted. More power to you.
Cash. I can use it to buy my own stocks in whatever company I want.
Stocks can grow over time. You are purchasing shares now and getting them years from now.
Right. So I can buy the shares now with cash the same way. Either way you swing it, its the same deal if its stock in a publicly traded company. But I'd rather take cash, with all of its freedoms, now than withdraw cash when stocks vest however-long from now. If it's super early equity in a promising unicorn though, that's different.