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Will be joining Spotify soon and the recruiter mentioned you can split your stocks into any two of the 4 options 1. Cash : 90% of the total stock value over 4 years 2. RSU 3. ATM : At the money 4. OTM : Out of the money Edit: Looking for suggestions from current/past Spotify employees. Wondering if anyone has suggestions on which options has worked the best so far for Spotify employees
It's all about the grant price, your needs / risk level, future growth and how long you stay here. If you wanna stay here longer and you think stock will do very good in the future, go with atm (maybe mix it with rsu depending on how much risk you want). If you think stock will go more than double in the future and stay there or more then go with otm. It's all explained in the docs you received
ATM: at the money options. If spotify stock grows above the current price, these are better than RSUs. The down side is that they become worthless if the stock price goes down OTM: out of the money options. The strike price will be higher than Spotify’s current price. This is riskier than ATM options because the stock price has to go higher to make any profit. On the upside, these will increase in value at a higher rate than ATM options if Spotify goes up significantly. Your question about what has worked is dangerous. Options are all about timing and you can’t predict market movement based on past performance. I’m sure many employees who joined in the last year or two would have seen significant growth by choosing OTM, but that doesn’t necessarily mean it’ll be true going forward.
congrats! i did 100% RSU, whatever you do don't pick cash or 100% OTM. if you really have no idea, a lot of people just do default mix (75% RSU, 25% ATM)
stock needs to grow at least 34% for ATMs to be better than RSUs, right?
To clarify the way ATM & OTM work at Spotify— Strike price is locked in on day of grant (a few weeks after start date). For ATM it is the price that day, for OTM it is 1.5x but, for ATM you can buy 4x as many options and OTM you can buy 8x as many. Personally I am leaning more on RSUs, not sure how much Spotify is a growth company at this stage and feeling a lil risk adverse
I'm leaning towards 75% RSU 25% Cash. Stock has been fluctuating and if you don't plan on staying long-term, ATM & OTM don't seem to make sense (and with today's labor market it doesn't really make sense to stay long at a company). They would only be better with at least 34% or 50% growth while everything is lost if it tanks. With RSUs you'll still benefit from the growth and still get something if it tanks. With an added cash component, you're even safer and kind of guard yourself from the RSUs tanking completely. That being said you also have your base salary which is safe anyways.
Curious what 3 and 4 are...
Ok, I looked it up. I wouldn't appreciate having to select from all of these options.