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Comment by duxup | Hacker News Reader

>don't want to have a large amount of my portfolio tied up in the company I work for.

Just before the .com bust a company I worked for decided to remove the option for employees to just dump their 401k contributions into company stock, and removed the option to direct a massive % of their paycheck into the company stock purchase plan. (I believe some of these limits became law later on but at the time it was legal)

Some folks got really upset by that. The argument at that time was "we don't to be a part of employees suddenly being broke if things go south".

About a year later they were right, things went south. Our stock did sorta well in the long term (not great short term of course), but IMO it was a good choice.

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This is a large part of why I feel this way.

I grew up near Ottawa, and had a lot of friends whose parents worked at Nortel. They were compensated with a lot of stock, which they held onto (it keeps rising, after all). Their pension plan was mostly invested in the company stock too.

When the company fell apart (let's set aside whose fault that is- different topic), they lost their jobs, their savings, their pensions, in their 40s and early 50s mostly.

Yeah I knew some folks at the time (.com days) who had life changing type money in company stock and they were able to sell a good portion of it at will. They didn't sell... it did not work out for them.

To this day I don't get why they didn't sell at least say $1million and stash it someplace. Sure let the rest ride if you want to do that but man save some. I never asked them about it after their company tanked, I imagine they don't want to think about it.

People can feel it’s “disloyal”.

So keep some but don’t keep all!

It boggles my mind when people vest RSUs and just leave them there, hold onto their employers' stock and don't sell & diversify. The RSU vesting day is equivalent to having bought the stock on that day, there's no tax advantage to holding onto it. Whether at SHOP or at AMZN/MSFT/GOOG, why keep all your eggs in the same basket?

And yet the average person does exactly that.

https://en.wikipedia.org/wiki/Endowment_effect

Yeah, even if I think my company will do well, having a large part of my net worth tied up in stock of my employer always feels a bit of an "eggs in one basket" scenario - if something happens to majorly impact the stock value, there's a decent change it will consequently impact my job security.

Let alone, a lot of people seem to think that they get the lower capital gains tax on the RSUs... and most companies fail miserably to educate their employees.

Not to mention the horror that is the tax code in US, causing you to underpay taxes... because the company that does RSUs doesn't communicate well with your regular payroll company.

Because up until about 6 months ago, the 3-4 year run to that point you were better off holding. I'm sure lots of people have had a very expensive (on paper) lesson this year about how much vested stock they should hold on to (if any).

It's 14 years since Lehmans went bust. Plenty of people there lost their wage and their investments (in Lehmans stock) when the company went under.

Stock options can be great, but you need to be aware of the concentration risk.

Isn't one benefit of these programs(from the employer side) that employees are more directly tied to company outcomes, and thus will put out better work/product? Of course one person won't shift the stock price, but as a collective, over time, it certainly would.

I think it is, but the question is how much of an incentive do you want (some) but maybe not overwhelming incentive where a bad quarter is completely demoralizing or worse...

That's just unsubstantiated claim.

Hence the wondering part, I personally have never been in such a structure, so I don't have first hand experience. BUT from everything that I have read, extrinsic motivation such as "work harder so your company does better so your stock goes up" doesn't seem like it would really hold up for too long.

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