Most big tech companies use RSUs, or Restricted Stock Units. These are not options nor dollar equivalents, they are shares. They are denominated in shares, and the grant is for a number of shares, with a vesting schedule of how many shares become yours on what dates (often a 4-year term, with 25% vesting after 1 year of employment, then ~2% per month or 12.5% every 6 months). Additional grants may be made in future years, with a similar or different vesting schedule.
The stock price when granted is mostly irrelevant (it matters to the company, and sometimes to your loan officer if you’re going for a mortgage or something, but it’s not part of your compensation or taxable income when granted). The stock price when VESTING each block is treated as normal compensation on your taxes. This stock price (at vest, not grant) is the capital gains basis if you hold it for awhile then sell it.
Behind the scenes, the companies calculate the grants by a “total comp target”, and figuring out how many shares to grant based on a dollar amount. But by the time it’s actually written down in an offer or made as a grant, it’s just shares. The only difference between a granted-but-unvested RSU and a normal share is that it’s conditional on continued employment, and there are no voting rights. Once vested, it’s literally a normal share.
Most big tech companies use RSUs, or Restricted Stock Units. These are not options nor dollar equivalents, they are shares. They are denominated in shares, and the grant is for a number of shares, with a vesting schedule of how many shares become yours on what dates (often a 4-year term, with 25% vesting after 1 year of employment, then ~2% per month or 12.5% every 6 months). Additional grants may be made in future years, with a similar or different vesting schedule.
The stock price when granted is mostly irrelevant (it matters to the company, and sometimes to your loan officer if you’re going for a mortgage or something, but it’s not part of your compensation or taxable income when granted). The stock price when VESTING each block is treated as normal compensation on your taxes. This stock price (at vest, not grant) is the capital gains basis if you hold it for awhile then sell it.
Behind the scenes, the companies calculate the grants by a “total comp target”, and figuring out how many shares to grant based on a dollar amount. But by the time it’s actually written down in an offer or made as a grant, it’s just shares. The only difference between a granted-but-unvested RSU and a normal share is that it’s conditional on continued employment, and there are no voting rights. Once vested, it’s literally a normal share.
Ah, I was probably thinking of the RSU/option distinction and misremembered. Thanks!