What’s the point of RSUs in big tech?
I’m not sure why we have them. Usually RSUs are super lucrative at startups because the startup could 10xX which makes your equity grow exponentially. But share price at big tech orgs will MAYBE double in the next 2-5 years, but could also likely stagnate or tank. Just imagine taking Nokia stock in the early 00s. So what’s the point other than offering employees cash? Is it a scam or do we actually get something out of it? #RSU #stock #comp #bigtech #amazon
so you drink corporate koolaid and make stonk go up because ur comp goes up
It’s good for company cos they just create new stocks out of nothing and don’t need to give you more cash. And make your comp looks higher.
It’s been a huge benefit for employees. Instead of getting $100k in cash, most employees have been getting a lot more due to stock appreciation. Also, why would it be a scam? If anything, it’s a scam at startups since they are usually worthless.
Unvested stock can be circulated back if employees leave and are replaced...
So can cash
@Amazon, cash is normally paid out biweekly whereas RSUs are paid out yearly, quarterly, or if you are lucky, monthly. If cash had to be vested and perhaps had a backloaded vesting schedule, you might have a point, but otherwise, a growing company has saved a lot of money. Now they can reward a new employee replacing you with fewer shares, yet it can be considered a pay raise (outside of stock appreciation)/
Its a benefit for the company (and you). The company generally owns a pool of RSU’s that they grant to employees after board approval. Like fiat currency, the company also has the ability to dilute and create more of these on demand. Amazon for example has a massive pool of these that they pull from. The exact number is in the company’s financial statements
“I’ll gladly pay you Tuesday for a hamburger today.” It’s a way to compensate you, ostensibly in correlation to company performance, but certainly amortizing the comp expense out and sharing risk with the employee. Say they give you cash instead. It’s worth a fixed amount. You’ve eliminated all of your risk but shifted it entirely to the company who has to ensure they can pay you a fixed amount of cash at the right time.
1. Creates ownership incentive as the employee has a stake in the business 2. Good retention incentive because they vest over time 3. Limits losses on bad hires. Companies get much of it back 4. Potentially unlimited upside for employee with fixed cost for the company
The points of RSUs is not to make you rich. RSU s are with their can value to you, but align your loyalty to the company (somewhat)
Wow people here are so misinformed I can just chuckle. The Microsoft guy/gal who said stocks are being made of thin air and lessens hard cash burden on company is more or less correct. RSU of big tech does not cause dilution. Dilution means dilution of control ie ownership ie voting rights. Your RSUs are not the Class A shares being traded on the market. They the class C shares for example do not have any kind of voting rights so no dilution. What is happening is you basically have loaned them your TC. This causes 2 things you will work harder / ownership to ensure company doesn’t tank and secondly it just helps them delay their payments to you / an interest free loan from you for being a koolaid sucker. Now mostly people are fine as you anyways invest in stock markets. You should only accept RSUs at large stable tech firms. ESOPs of startups are bit different as that time they do not have these share classes so when they will become stock units most probably you got a pie of the company. Ex: Googles normal shares on market at Class A. One share one vote Class B shares are founder share with 10 vote per share. Helps keep control. Then comes Class C sucker shares for employees with no voting rights. It just mirrors Class A stock price by a slight discount.
Lol