Incredibly untrue. I’m sorry that your particular company saw a 60% decrease in stock price over 3 years. But this is not the norm for any reasonably healthy company.

I think many people on HN may be too young to remember the early 2000s, when you’d kill someone for your stock price to be down only 60% over 3 years, but it absolutely happens to good companies too.

We can talk about normal expectations without having to explicitly state that black swan events can happen. If you took a stance of “I’m not going to take any pay in equity because I saw what happened in 2001” you would have left millions of dollars on the table over the last 20 years.

Stocks underperforming cash for three years is hardly a black swan event; it happens in about a fifth of 3-year periods.

I’m clearly talking about the early 00 market crash as the black swan. Some depreciation is expected to happen sometimes. Obviously.

Underperforming cash is very different than underperforming cash by 60%.

I think that once you start looking for hard evidence on software company stocks, you're in for a learning experience.

? I’ve been in this industry for…a while. I watched people around me packing up their cubicles in 2001. What is it that you think I am missing? Genuine question because I’m not sure how to interpret your comment at all. Tech stocks have had strong growth as a sector for about 2 decades. Even if they hadn’t, even if they had been flat for 20 years, companies are still paying out $100k+ a year in equity (in addition to base salary).

I thought I was going to be rich with my first job at a startup out of college but the dot com bust basically made it all worthless. Stock is great but cash would have been better.

What would you have done with the cash? Hold it? That’s how the poor stay poor.

You aren't guaranteed your salary either though and in many of those cases in the 2000's workers were laid off. Being paid entirely in cash salary doesn't make you immune to market turbulence.

It happened 1 year in 20, after an incredible run up, and good companies recovered.

Fully concur. I recieved stock appreciation rights (SARs) as a bonus at one company for a few years. CEO drove company into the ground that effectively wiped out all of these SARs. I was bitter at the CEO for making stupid decisions, but not at the fact that my bonus was in the form of SARs. If I'd have stuck to my guns more, the company would have probably succeeded and the SARs could have had significant value.

Bottom line, with stock payment, you have a say in their ultimate value. Do good work, company value invreases, you enrich yourself.

It's hard to believe that your lack of contribution tipped the scales so the company failed. Doing good work, in itself, doesn't increase the value of the company.

In small companies, the ability to influence the CEO against poor decisions can make a massive difference

In reality, most stocks decline. You know this from VCs hitting 10x semi-frequently and still losing money.

Statistically speaking, they're correct.

This is literally the opposite of reality. The private/VC market is not relevant here. We’re strictly talking about publicly traded companies.

No this is actually true. Most stocks do go down (or at least only match much less risky investments like short-term bonds), but the stock market goes up because some stocks go up a lot. This is why all investors diversify. For example, the Russel 3000 Index goes up ~10% a year because they remove bad stocks and replace them with ones that seem better. But, employment at a single company with stock-based compensation is a concentrated bet on that single stock during the employment timeframe.

Recently learned this from the excellent and very pithy Michael Batnick blog https://theirrelevantinvestor.com/2020/09/10/most-stocks-suc... who was citing https://wpcarey.asu.edu/department-finance/faculty-research/...

I agree the stock market has positive skew but in your career you will have enough bets to smooth out the effects of betting on a single stock. Additionally, you're not really making the same bet as an equity investor because your bet has optionality. Your downside is capped at less than a year in loss earnings because if the stock goes down and the company cannot bring you back up to market rate you just switch companies. If the stock goes up, you enjoy 4 years of above market compensation before getting reset to market rate.

I've never been in the situation of a significantly down price over more than a year. Is it normal that the firm will give 'refreshers' to get back to the target comp in that case?

Classic survivorship bias

/shrug. The vast, VAST majority of public companies do not lose 60% of their value in 3 years. I guess that’s just me surviving though.

The stocks vest progressively. You don’t literally have to wait 3 years to cash out.

If you can’t afford a single but if variance then I guess RSUs won’t make you happy. But for everyone else they work just fine (unless your company goes down in flames, in which case you have bigger problems and are probably job searching anyway)

I don't think you realize how wrong you are. Many average, boring tech companies pay RSUs big style. Not FAANG big but they're worth crazy amounts.

If the stocks go down before they vest you can just leave for another company and reset your compensation to the normal level, it isn't like the contract says you have to stay.

If you keep the stocks after they vest then that is your fault for keeping them instead of selling them.