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Comment by jensvdh | Hacker News Reader

$250k base or $250k INCLUDING stock??

The second one, but if you're not thinking about salary in terms of total comp, you're doing it wrong.

Sure, but $1 of stock isn't worth $1 of liquid assets. It may be worth more than $1 in the long run, but when you're first handed it, you have to undervalue it, compared to hard cash.

I'm a theoretical millionaire several times over, from stock options in startups that suffered the fate of the 99%. You can obviously put more value in the stock of a SV megalith, but even then, you're putting a lot of eggs in one basket.

Stock from a public SV firm is almost as good as cash, and comes with a large amount of lifestyle intangibles.

If you sell it as soon as you get it then it's good as cash. As for the lifestyle intangibles, does having to live in Los Gatos or Gilroy if you want to raise a family count as a perk?

> $1 of stock isn't worth $1 of liquid assets

Er, why not? Only difference is I have to pay a $5 trading fee on Schwab to turn stock into cash. So I guess $10,000 in stock is worth $9,995 in liquid assets.

> even then, you're putting a lot of eggs in one basket.

Only if you hold the stock. Which nothing forces you to do. I can (and do) sell all of my tech company stock on the day it vests and buy other assets instead.

I think you must have the wrong mental model of how RSUs work. Nothing forces you to hold the stock once it vests. It's yours, you can sell it and do whatever you want with the money.

Usually when people at a public company say "I make X", X is the sum of base salary, cash bonus, and the value of RSUs that vest in a year.

You can hold it to reduce taxes right?

Not that I'm aware -- how would holding it reduce taxes? I'm not sure I understand.

Long Term Capital Gains Tax treatment when you sell (20%) after at least one year vs regular Income Tax treatment if you sell right away.

Yes, but that's only on the capital gains. You still pay income tax on the value of the equity when it's granted.

If the stock is $100 when it vests, you pay income tax on $100 per share, whether you hold or sell. It's exactly the same as if you got paid that money in cash and then decided to buy shares (after paying tax).

If you then hold and it goes above $100 while you held, you pay capital gains tax (short or long-term, depending on how long you hold) when you sell.

Again, exactly the same as would happen if you bought those shares yourself with a cash bonus. Getting shares really is the same as cash, for tax purposes.

No. RSUs are not stock options. They're taxed at their current value when they're given to you.

Right, I was assuming sjg007 was talking about tax treatment of the capital gains if you hold onto the stock after the RSUs vest.

I still don't get how there's any way holding it instead of selling it reduces taxes.

If you sell on vest, you pay income tax and 0 capital gains. If you sell after vest, you pay the same amount of income tax, and possibly nonzero capital gains.

Yes, I think the clarification needed was that you can reduce capital gains tax rates but not income tax rates.

But you don't have to hold $company stock to do that. You can sell on vest for 0 capital gains, then buy diversified index funds and hold those long term.

And that's indeed what I do! ;)

There is no clarification to be made. There is no way to reduce taxes on RSUs by holding onto them longer. When $100 of RSUs vest, you get taxed on $100 of income. You can either keep the stock or immediately sell it with no further tax event related to that initial $100 whichever of the two options you choose. If you keep the stock, it is equivalent to having bought $100 of stock at that instant. Psychology aside, the hold versus sell-on-vest decision should be predicated entirely on whether you would have bought that amount of stock with your own cash at its vest price.

Well... if it's worth $X when it vests, you pay income tax on $X. If it's worth $Y when you sell, you pay capital gains on $(Y - X), presuming you held it longer than a year. If it was less than a year, you pay income tax on $(Y - X).

At least, that's my understanding. I'm not a tax accountant, though. This is not financial advice.

THat's not as true when we are talking about stock from Google, Facebook, Amazon, Microsoft, etc... The risk is dramatically lower.

Ahhh, that explains it. When the market crashes, you become plebs like the rest of us. Except you'll be living in the most expensive place in the country.

right, because RSUs go to 0 in a stock crash.

Not really. At worst you lose a couple of years of growth in prior equity grants but your yearly refresher will be bulked up significantly to account for the diminished value of the stock and voila, pleb no more...

Yup, if the stock goes down, and you get a bigger (# of shares, not $$) refresh, if it goes back up to where it was before, bam, you've got it made. If you're lucky, you'll have enough for a down payment on a house....

Only for people who didn't sell on vest... stocks are a liquid asset just like cash; nothing forces to keep the shares you're paid with.

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