Price on the start date (or date of grant, if different from start date - for example, when board approval is needed) is irrelevant for tax purposes; it may determine the number of RSUs that get granted if the grant specified $$ instead of number of shares. The tax implications happen on the date of vesting based on the stock price on that date.
Restating what @BunsenBurner said in a slightly different way, RSUs grant a dollar value to be given in the form of stock at the time of vesting. For example, if you are granted $100K RSUs, on a 4 year vesting plan that vests yearly, youâll get $25k of stock 4 years in a row, the number of shares to be determined on each vesting day.
An RSU is worth the exact dollar amount that was stated when it was given, assuming the company is still in business. ISOs and NSOs, particularly in private companies, can end up being anything between a big win to a total loss.
Even RSU isnât worth the exact dollar amount because of the restrictions. Restrictions are really embedded options, which, in this case, reduce inherent value.
We are way off topic but this is very wrong. The number of shares is determined on the grant date not the vesting date.
If you are granted $100k in shares and the price per share is $25 on the GRANT date, you will be awarded 4,000 shares. 1,000 shares will vest each year. They will be worth whatever the market price is on that date.
I think total compensation is very different than base salary. Lots of new grads who started at places like Hubspot in the past few years and got stock, have seen how that is not money in your pocket (unlike base salary). Their golden handcuffs (nobody wanted to leave before being fully vested in their stock shares), disappeared when those stocks all plummeted from ridiculous highs. Stock as compensation can be interesting, you pay income tax at the time of the grant (in most cases) but yet you didnât actually get that money (and it can go down).
A sign on bonus is one time compensation, so the next year you donât get that again. Other types of bonuses can be tied to company performance, so again they can be lower than you got in a past year.
The best compensation offer for anybody is the one with the highest base pay (that hopefully wonât go down.)
I remember back a long time ago, my husband and many of his coworkers had tons of stock options from their employer (that had been accumulating over years.) The company stock was at a nice high value and my husband cashed his out. He couldnât talk his coworkers into doing the same. Well the stock crashed and never again reached the stock option value. So they were all sitting on worthless options that would never amount to anything.
Just for fun, I took a look at the median total compensation on levels.fyi for newly graduating software engineers at various companies. I recognize that with the slowing economy that these numbers may not be applicable going forward. But here is what they have been, with highest compensation first:
>= $100K
$600K: Hudson River Trading
$350K: Jump Trading
$242K: Stripe
$226K: Netflix
$189K: Google
$186K: Facebook / Meta
$162K: Adobe
$160K: Amazon
$160K: Microsoft
$160K: Wayfair
$131K: Kayak
$115K: WalMart
$102K: IBM
< $100K:
$95K: Citi
$86K: Mayo Clinic
$85K: Boeing
$84K: Northrup Grumman
A few things I noted here.
No surprise, finance companies pay the most.
While FAANGs are perceived by many to have the highest tech pay, thatâs often not true as there are many smaller companies that pay more, like Stripe.
But FAANGs traditionally collectively hired several thousands each year and paid them well
There are many companies that pay the same or close to FAANG salaries
Some companies that pay six figures might be a bit surprising, like WalMart.
Traditional engineering companies like Boeing and Northtrup Grumman are pretty far behind in terms of pay.
My oldest son is a senior at a state university in Florida (not UF or FSU). He interned this past summer with a global consulting firm (not MBB, but most would recognize this company) as a Cyber Security Analyst. He was offered a fulltime role after graduation with a base in the low 70s and was told that with bonus & overtime he would W2 six figures. I canât even begin to imagine what he will do with the money.
Yes. But I felt that was the only fair comparison, as some companies do not offer any stock and little bonuses, whereas for others that is a significant part of total income.
Of course. But sometimes there is a danger that traditional brick and mortar stores donât understand what it takes to compete for talent, but WalMart gets it to some extent. Incidentally, WalMart is also one of the highest paying companies for truck drivers.
As described in the posts above, it can happen in certain situations.
But, I would reflect on the context for the question. It is not common enough to rely on if a student is considering borrowing large sums (via parent loans) to attend an elite program/college.
There are many RSU programs that grant shares, not value. That was how the stock program worked at my former IB and how it works at my current company. We were/are also granted options with a strike price equal to the FMV of the stock at the time. I am not totally current on the regulations around ISOâs, but the regulations I recall are that they must be issued with a strike price not less than FMV at the time of issue and that âbargainâ options would be subject to separate taxation as deferred income. There is a determination we do of FMV each year that the accountants sign off on in our audited statements. There is some wiggle room/reasonable discretion in determining FMV, especially for private companies, particularly start-ups that are pre-revenue/profit.
I think it will be useful to list companies that are not in CS, Finance or Consulting that pay >100K at the start, because that information will have a larger audience here. I am not knowledgeable to attempt it myself though.
People forget that law enforcement officers can make six figures in year 2, after getting through the academy and field training in year one. They also get those cool take home cars that have lights and sirens on them.
Haha. I am sure there are other jobs. For example I am told AMAT hires mech/electrical people, with a sprinkle of software/data skills, and pays them 150+ or something. I heard some defense companies pay 120+ for mechies â like Northrop etc. I am thinking along those lines.
RSU are not worth the same amount as given. In current economy RSU my DD got awarded last December are worth exactly half of what was given since the stock price dropped. Look at FB stock. It was about $300 in 2020 when my DD graduated and at $130 now. So those who potentially started above $200k annually including RSU and who didnât unload them as soon as vested found themselves with much lower TC.
Meant to include engineering with tech. In all seriousness, it will have to be jobs that require hard to obtain skills in industries that are highly profitable (the employer itself may not be but the companies who they are competing with for this talent are).
