Hacker News Reader

Comment by olentangy | Hacker News Reader

I didn't work for Don, but as an engineer in another part of the company. I too was able to retire (at age 49).

It makes me sad that the stock options that made my retirement possible won't be available to the next generation of engineers because of bad tax law (Sarbanes-Oxley).

View on HN

How does that follow exactly ? Aren't RSU's an option (like at Google) to reward employees with stocks (but not stock options) ?

The original options we had weren't restricted. Also, most of them were at a lower strike price since Apple wasn't highly valued then.

Typically you get a much smaller number of RSUs than options. Though there's no strike price. So RSUs are often worth more if the stock doesn't move much, but worth a lot less if there is a huge run-up.

Much better answer.

The benefit of RSUs to the company is not just that they are worth more if a stock doesn't move much, but that they retain value when a stock drops. This avoids the trap where a company has a dip in value, and suddenly all of the people you were trying to keep golden handcuffs on have nothing keeping them there. So they start leaving, which causes you real problems.

The downside is exactly what you say - the potential upside on options is massively greater than RSUs.

Am I missing something? You still have the same problem with RSUs. RSU value can decline enough that your staff may feel they're no longer getting fair comp and move on.

It can, but it is a lot harder.

If your stock price dips 20%, odds are that most of the stock options you've given out in the last couple of years are now out of the money. But your RSUs retained 80% of their value. 80% of a golden handcuff is a lot better incentive to stay than 0% of one. However Wall St can easily drop your stock price 20% based on nothing real.

Of course, but if your stock price drops by 25% or so then the RSUs still maintain most of their value. If you were issued $400,000 of RSUs and they're now worth $300,000 - that's still a powerful incentive not to leave before they vest.

On the other hand, if you're issued stock options with a strike price of 10% or so below the market price when they were issued, a 25% drop means that they're completely worthless.

I'm not too familiar with the implications of Sarbanes-Oxley-- is this a dig at the SJobs options backdating scandal?

Reply on news.ycombinator.com