RSU are based on units of stocks or the monetary value of them?
When public companies give RSU as a part of the TC do they offer units of stocks or is it the fixed monetary value that they offer? Ie. Which one of the following is how they offer? 1) 1000 units / yr (because their offer is to be an equivalent of 100k / yr and given that the current market price per unit is $100 therefore in the offer contract instead of $100k, they put the actual number of stocks they are offering which in this example would be 1000 units). 2) $100k / yr regardless if the stock price goes up or town. Meaning that if the price today is $100 / unit of stock and next year when it vests it becomes $80, they will release to you 100k / 80 = 1250 units which then you can sell privately to liquidate it.
Option 1. It’s typically based on the monetary value at the time of initial hire. If the value of the stock goes up over the years, the number of units you’ll receive from bonuses will be less. Changes in price doesn’t affect the RSUs given to you on initial signing date that still need to vest.
Not sure if I follow exactly cuz your description is more describing option 2. Would you elaborate on what do you mean by what you will receive from bonuses will be less...? And the changes in price don't affect the RSU use given at the initial signing date that is still needs to vest. ..?
You’re right for relatively small changes in price. If the market cap changed very significantly the variable bonus will change too.
$X_1 where $X_1 is converted into Y_1 shares at a later date (usually next month), and then held in trust, and vests over ~4 years. Each year, the process repeats, and you get $X_2 worth of shares. Assume equal vesting per year: Year | Shares vesting 1 | y_1 / 4 2 | (y_1 + y_2) / 4 3 | (y_1 + y_2 + y_3) / 4 4 | (y_1 + y_2 + y_3 + y_4) / 4 5 | (y_2 + y_3 + y_4 + y_5) / 4 Where $x_1 is usually much higher than $x_n {n>1} leading to a pay-cut at year > n. $x_n {n>1} depends on performance and your level. At L59 it’s a joke at roughly $3000 for average perf. It quickly goes up, but you have to be at L65ish for it to rise above $x_1
# 1 which is why TC figures will continue to explode. As people’s TC continues to grow outside of the company’s control they will expect matching of their current TC at a new company, not their original offer TC. Endless cycle. Good for me but I’m worried about exacerbating the compensation bubble further as the economic implications aren’t great.
There’s still plenty of room for our TC to grow vs the value we create for our employers. Over time the amount of value one engineer produces is only going to go further up.
Tier 1, I agree with your first statement but not your second. I think there will be diminishing returns to software innovation at some point, but we are not near there yet (it might take a lifetime).
1
All the ones I have had worked like this: they specify $X thousand of stock granted on date Y. On date Y (usually about a month after the offer) they transfer the number of shares it takes to make that dollar amount to my account. I don't have access to the shares until they vest, and depending on the offer they vest one-third or one-fourth of the original set of stocks every year.
My stock grant follows #2. RSU value when I joined was $200k over 4 years. The stock at the time was ~$101, total of 1980 stock units. Now my grant is worth ~$274k (same 1980 units)
Almost always #1
Google changed from 1 to 2 in 2017
Thnx