What happens to RSU grant for new hires when the stock drops 2/3 ?
Like Facebook / Meta, when it was $300 / share, new hires may get $100k of RSU per year. But now, what happens to the new hires when Facebook stock has dropped to $100 / share? Do they give the same $100k RSU per year or $33k per year? If they still give $100k (and fix it by the number of shares) and Facebook goes back up to $300 / share, then their $100k per year all of a sudden becomes $300k per year. So what do new hires get as an offer? (will that offer given to the new hire be 1,000 shares per year, or will it be 700 shares or 333 shares?) That is, candidate A joined when the stock was $300, and was offered 333 shares RSU per year. Now candidate B joins when the stock is $100. Will the offer be 333 shares of RSU per year, or about 700 shares, or 1000 shares now? #rsu #offer
They get 100k worth of rsu regardless of share price. Thats why people try to jump companies when stock price is low
when the stock drops like a cliff, and you want to join... that's a bit counter-intuitive. Could be joining a sinking ship.
So it requires luck. There’s no guaranteed way of making money like everything else. Are you an intern?
At least you have an opportunity to reduce your tax obligations. If you can afford, pay the taxes in cash rather than selling to cover.
Why is that better?
You keep more shares rather than selling shares to pay the tax. The downside is more concentration and less diversification
It depends on the company policy but all these TC numbers are always based on some stock evaluation at start date. I'd have like $600k+ TC if my shares held. But most tech is down 60-80% since Jan 2022 highs
That’s why you switch companies when it’s low
They give you $x in stocks. $100k in $100 per share stock is the same as $100k in $200 per share stock. At the end of the day, you get $100k in stock. Whether the market goes up or down after that is up to chance and you can only speculate.
you mean for Microsoft, it doesn't matter what stock price it becomes later? You always get $100k per year from that initial grant? That sounds different for some other company, where they calculate it is 1000 shares per year and the stock price matters.
OP you’re confused. There’s the initial stock grant. You get $400K worth of stock regardless of the price. This stock is set aside for you. If the stock price is low, that means more shares. If the stock price is high, that means fewer shares, but either way it adds up to $400K Now every year, a quarter of that stock will vest. So you get 1/4th of that initial stock grant. If during that time the stock price has went up, then it will be worth more than $100K. If it went down then less than $100K.
When you get an offer for $100k RSUs/yr for 4 years. The price of the stock is calculated near your start date and you actually get X number of stocks a year. If the price drops to 33% of its original value, the number of stocks doesn’t change and you receive the 33% valued stocks on the vesting date. They don’t give you more stocks besides refreshers. Interestingly this exact situation happened to me at Meta so I jumped to Amazon due to their most cash offers for the first 2 years
I got my initial stock grant at Meta at $353 and last year it felt like I was robbed when it dropped to $80 lol But with new refreshers I'm finally back on track where I was at the beginning
I joined around all-time-high, you win some you lose some 🤷
Back on track means Meta actually gives you extra refreshers in 2023 so that your TC is within the expected band in 2023?
You'll get the amount divided by the share price at grant (or some companies do a 30 day average, etc...)
Grants are based on the number of shares, not monetary value.
It depends on the company
They may say that, but it’s always based on the monetary value. This way or another.
RSUs are defined in dollar amounts but converted to shares a fixed time before you join. Then the number of shares are fixed. Read your contract to understand this better.
Sure, but 100k worth of 2023 meta shares could be worth 300k (or worthless) in terms of 2024+ shares. I think OP is curious as to whether the growth is priced into the dollar value of the grants
They get the share amount. And it isn’t just for new hires. It’s for everyone. The stock amount you get doesn’t change depending on price. If it went up by 70% should Meta still just give you $100k? But refreshers can even it out overtime.
I thought usually the offer letter says: $100k, but will be converted to the number of shares when they grant arrive to you. So ultimately, it is the number of shares that is fixed
The number of shares is the amount the offer letter says divided by the average price of the week before you joined