Yes but you do still need to think about vesting schedules. If you are at a company that doesn't do uniform vesting, then e.g. $400k stock/ 4 years might be more like $50k this year, $100k next two years, $150k the last year. Not sure how levels.fyi handles this but I would say that is not really the same as +$100k/year TC during your first year, given that people can change companies often, get promotions and refreshers, etc. To me it's more like an automatic raise.

In addition to that, RSUs are taxed at around 50% before you receive them and another 20% of the value it gained from when you received it to when you sold it. So the numbers in your bank account look less impressive than the ones on paper.

Yes, but to be fair to RSUs, this is no worse than having some additional ordinary income.

The 50% on receipt number comes from your marginal federal tax bracket plus state -- same as if the dollar value were additional gross (pre-tax) income.

The 20% on growth number (potentially 25-30% including state) is what you'd pay on capital gains -- same as if you'd taken this extra income as cash and invested it in anything.

RSUs are taxed the same as salary. If you don't like them gaining value, then sell them as soon as they vest, and that's 20% tax of $0.

Just as an FYI, my understanding is that Google, FB, and MS all offer 25% annual vesting with no cliff, the exact vesting schedule depends (for Google, for example, it depends on the exact grant, but a 400K grant would vest monthly). Amazon offers a 5/15/40/40 backloaded vesting schedule, but cash bonuses in years 1 and 2 to compensate (sort of).

Maybe I don't know exactly what cliff vesting is, but while Microsoft doesn't backload vesting, it does do vesting in chunks (like once a year iirc). And as another commenter pointed out it doesn't kick in until 6 months. But at places like google the vesting is monthly and starts after the first month.

Also one quirk of microsoft is since they have a half-title promotion system, as I understand it, it's normal to get refreshers on years 1-3 through a 4 year vest after a half-title/one-level promotion.

Amazon comp drops significantly after the 4th year, unless you happen to get promoted twice before the end of your 4th year.

I know Google has no cliff, is that also true now for the others?

My understanding is that Google dropped their cliff after facebook. I think MS is still on 6 months, but that's just their vest schedule.

Yes, they are stock and not options, so you own them outright without needing to buy. So once vested you can sell, and owe tax immediately since they have real value.

Usually you’re given a number of shares when you join, and the value of those shares change as they vest. This can lead to some really overinflated comp packages if a person joins before huge growth that a new person would not get.

There’s often restrictions around when you can sell while still employ by that company to avoid insider trading laws, like you can sell right before earnings reports.

That's what I thought. Public company stock is so much better than options. It's guaranteed income/value, unlike options, and when you leave you don't have to pay for them.

I took a “pay cut” moving to a public company, unless you discount the startup claims of value, as you should since a dollar of options is worth significantly less than a dollar of public stock, and financially much much better off

You're guaranteed to receive some stock. As for the value, that depends on the company performance. But yeah being public stock you know how.much is worth and you can actually sell it

With RSU (restricted stock units) the price is not given; the number of shares is. Basically, you are granted a number of shares to vest on a particular date (the vest date is the date the shares are yours).

For public companies, the vest date is also the release date, which is when the shares are recognized as income. You have to pay taxes when they are released, which is basically 25% federal tax plus whatever your state's tax rate is for this (10% in CA). To pay the taxes you can either deposit cash to cover the amount and keep the shares, or sell some fraction of the shares on the release date.

If you keep the shares, then any gain after the release date is taxed as capital gains. Basically, from a tax perspective it's equivalent to the company paying you cash on the release date equal to the stock price of your shares and you buying shares with it.

On letting the options expire:

There are other options than purchasing the options yourself or just letting them expire.

From a pure finance perspective, you just need to find someone to take on the risk of the exercise. My company, ESO Fund, has a diversified portfolio of startups and as a result can take a $20k bet with much more ease than a single employee making a $20k bet.

A key point is that a certain number of shares is set aside for you at the time of the grant, and after that their price will fluctuate along with all of the other company stock in the stock market. You can just look at the stock price and know what your shares are currently worth.

As pointed out by others, they vest slowly over 4-5 years, to get you to stay. If you leave you lose your stocks. Also, they are taxed quite heavily so realistically imagine half of that. At the end of all that, $120,000 stocks would look like an extra 1000$ per month, which is still pretty good.

But levels.fyi is reporting annual stock. Facebook E5 is listed at $146,000 in stock annually not 4-5 years total.

RSUs are taxed the same as salary.