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.
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....
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.
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.
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.
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?