[mlthoughts2018]

Companies should either:

- award RSUs that have a liquidity event as the final vesting requirement and don’t expire (so you are not taxed until you can sell, and don’t risk losing what you already earned), or

- pay annual cash bonuses that are “grossed up” so that the after-tax amount of the bonus is enough to cover the taxes levied against the employee’s value of actual stock or vested RSUs, etc., and ensure the company bears that tax burden.

I’d be more forgiving to fully bootstrapped companies, which are often fairer to employees anyway.

Not willing to compromise at all for VC-backed companies, period. They also should be paying full market wages and the equity portion is solely meant to be competitive with the equity compensation or bonuses at public companies.

[zrail]

The IRS considers RSUs that don’t have an expiration date as being close enough to actual shares to be taxable income. There has to be a “substantial risk of forfeiture” to qualify for deferred taxation.

[mlthoughts2018]

In that case, then only the second suggestion.

[phamilton]

That's usually referred to as Phantom Stock, and is a thing.