What should we expect from options/RSUs if the stock market takes a big dip?
Wondering if anyone has experience working at a top tier company when the stock takes a major hit. Do the companies give more stock so your TC doesn’t drop? Or is a drop just the risk we all take and everyone rolls with it without action? If there are more shares given, is it an out of band grant or just a bigger refresh next time that rolls around? Also wondering if that is a good time to switch companies since employment packages tend to be anchored to a dollar amount and at a lower stock price that means more shares. Or will packages quickly adapt to the change in stock price 7 YoE, 200k & lots of paper money - moving to FANG shortly
Options/RSUs will also take a big dip 😋
*options could go worthless
We are given our RSU grants in dollar amounts, so the number of shares varies inversely to the stock price (I.e. if the grant Target average value is $10K, you would get 1000 shares of the stock price is $10 and 200 shares of the share price is $50).
Is this calculated on a monthly basis as they vest or once for each grant at the start?
That was only for the couple of weeks in between focal delivery and rsu delivery date. It was around the time the stock was jumping and dropping 2-5% every couple of days. I suspect that decision was made so they could lock in the $ amt for all focal stock early and without fluctuation.
If we see a big correction (soon), our TC’s will go down like nobody’s business. Your $50-100k yearly RSU’s will look more like 20-30k before tax. So your TC could end up in the low 200’s if you’re at a FAANG. That’s why it’s crucial to take profite and sell RSU’s on a yearly basis... don’t be too greedy! That’s actually a very good topic. Nowadays companies have to keep up with the market to align new folks with folks who got it before the stock market rush from 2008 til today. If market crashes tomorrow everyone’s TC will drop even the older employees
If industry market cap drops as a whole, then yeah.. Comp will drop. That's the point though isn't it? You only get compensated highly if you produce/perform as an industry.
Yeah, but it isn’t impossible that revenue keeps growing while the stock drops, due to valuation multiples being high now and eventually correcting. In that case I’d argue the company & employees performed well.
Sure but that wouldn't be a crazy drop
Side rant: it bugs the shit out of me that my company provides RSU grants without any compensation for dividends paid out (since those subtract from shareholder equity). My company targets 40% of earnings to go to dividends.
If the whole market drops your TC drops. If it is only your company top performers are compensated, the rest lose TC. Source: I have been in both cases in different companies