Seeking advice RSU

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NabSh
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Seeking advice RSU

Post by NabSh »

So I still consider my self new to bogleheads. I spent my early years trying to beat the market without understanding the additional risk that carries.

So one question I have is about the RSU. My understanding is that boglehead advice is to sell these immediately as they are vested.

My thought is someone has given me free money. If I don’t trust the company to grow why do I work for them.

I work for a MegaCorp. They would not grow like Amazon or FB. But they are still expected to grow.

Please help me understand boglehead theory about immediately selling RSUs.
pizzy
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Re: Seeking advice RSU

Post by pizzy »

Why don’t you consider RSU’s a form of compensation?

Do you invest your paycheck in your company’s stock also?

Why is this different?
Vanguard/Fidelity | 76% US Stock | 16% Int'l Stock | 8% Cash
8301
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Re: Seeking advice RSU

Post by 8301 »

NabSh wrote: Sun May 28, 2023 8:09 am My thought is someone has given me free money. If I don’t trust the company to grow why do I work for them.

I work for a MegaCorp. They would not grow like Amazon or FB. But they are still expected to grow.
You choose a work for your career and a means for a living. If you are also serious of your choice of career, it is a big part of your life. Investment is solely for a financial reason, nothing else. If you have money to invest, would you invest in your employer? If your employer hits a rough patch, both your job and your investment are in danger at the same time. I would like to work which is is dear to me and reap the financial benefit from somebody else's labor by investing wisely.
RSU is not a free money, but a part of your compensation. Depending of the price of stock, my RSU payout is comparable to my base salary. Work does not have to do with investment.
Last edited by 8301 on Sun May 28, 2023 8:36 am, edited 1 time in total.
niagara_guy
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Re: Seeking advice RSU

Post by niagara_guy »

Many many moons ago I worked with a guy who had all his eggs in the company stock, maybe a million dollars in today's dollars. The company was flying high, so he had become rich on the stock, but the company declared bankruptcy and he lost it all. I won't hold company stock in my portfolio.
fire_2030
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Re: Seeking advice RSU

Post by fire_2030 »

If you want to hold some vested RSUs just try and limit it to 5% of your portfolio. Same advice most would give on any individual stock
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TomatoTomahto
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Re: Seeking advice RSU

Post by TomatoTomahto »

niagara_guy wrote: Sun May 28, 2023 8:36 am Many many moons ago I worked with a guy who had all his eggs in the company stock, maybe a million dollars in today's dollars. The company was flying high, so he had become rich on the stock, but the company declared bankruptcy and he lost it all. I won't hold company stock in my portfolio.
I once worked with a guy in the C-suite who had enough to retire to a “sailboat life.” He though he knew about the company and could get out in time if he had to; I guess he wanted a “yacht life.” Greed was his downfall as his RSUs (and additional company stock) went to 0.

When I worked with him he was trying to get back to financial independence. He got laid off and I don’t know what happened to him afterwards. Nice enough guy, just greedy and had an inflated sense of what he “knew.” Sad.
I get the FI part but not the RE part of FIRE.
knowledge
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Re: Seeking advice RSU

Post by knowledge »

They say that RSUs are a form of compensation which gives you a stake in the company and is to align your incentives with the company's future.

In practice, your RSUs are never going to amount to any material stake in the company and for every success story of someone holding onto their RSUs for decades in <insert hottest stock of the moment, today Nvidia>, now worth 50x, there are so many other companies whose story isn't so sweet. So the RSU vest is the equivalent of the company paying you the same amount of money in a cash bonus, and then you immediately using that cash (after tax) to buy your company's stock.

Would you do that with your bonus? If you would, yes, keep the stock. If you wouldn't, then sell it.
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TomatoTomahto
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Re: Seeking advice RSU

Post by TomatoTomahto »

OP, my wife and I have a combined 40 years of getting and selling RSUs. One time we would have hit a home run if we retained the stock; mostly we would have roughly broken even. One time we would have gone down 90%.

These were megabanks.

If you think you know better, good luck. As someone upstream said, if you think it, why not invest your paycheck in company stock also?
I get the FI part but not the RE part of FIRE.
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NabSh
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Re: Seeking advice RSU

Post by NabSh »

Thank you. Good advice. I agree with it all that is said.
Jack FFR1846
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Re: Seeking advice RSU

Post by Jack FFR1846 »

I live outside of Boston. This was the seat of Polaroid. They secretly spiraled down and down and down. Internally, the 401k very actively pushed taking Polaroid stock as part of one's retirement. Executives of the company actively pushed employees to go on the open market and buy more Polaroid stock. Then bankruptcy. The stock went to zero. Many, many employees had counted completely on Polaroid stock for their retirement and now had literally nothing.

RSUs are no different. Sure, you get them for free. But upon vesting, you are immediately charged income tax from the first dollar. So they aren't completely free. And if/when they nose dive, then what? You get to take a loss? Doesn't sound like a good plan to me. I actually owned Polaroid stock when it crashed. Fortunately, I only lost about $4000. I had friends working there and they are still working in their 70s because their retirement savings went to zero. I also worked for Fairchild when I received employee stock at $48 a share. Well, I thought I had been too late joining the company to make the stock buy date, so ignored this. I ended up leaving about 7 months later. Some time after that, I get a notice of my employee stock and I look to see what it's now worth. $12. Yes, I dumped it at a loss.

My experience taught me to get rid of any company stock the absolute soonest I can. I just did that last week with my current employer (a chip company) and am quite happy to have the cash instead of betting on a stock tied to my employer. The thing is, when things go bad (I also worked for Digital Equipment Corp), they go bad for both the company and the stock. So the example scenario is a company goes downhill (Polaroid, DEC, take your pick.....your company) and you're out of a job and your stock becomes worthless. Too much risk. If you really think companies like the one you work for are going to do better than other sectors, buy another company. Or buy an ETF that holds the sector. The more diverse, the lower the risk.

I hold zero shares of my company's stock.
Bogle: Smart Beta is stupid
Yarlonkol12
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Re: Seeking advice RSU

Post by Yarlonkol12 »

RSUs are ordinary income, they have no value until vesting day, at that point they become ordinary income no different than your normal paycheck

What's the difference between holding vested RSUs and buying stock with your paycheck?
My posts are for entertainment purposes only.
milktoast
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Re: Seeking advice RSU

Post by milktoast »

It’s correlated risk.

Assuming this isn’t c-suite or a startup (which would normally be ISO not RSU), the logic is always pretty much the same.

If the company is doing well, you’ll be getting raises, promotions, bonus, and RSU refresh every year. So selling each year only loses a small portion of the total upside from this employer.

But when the company turns, you won’t be getting any more raises, promotions, bonuses, and refresh. Instead you’ll be getting laid off and the RSU are going to fall in value. in this case, selling each year is the only way to get any upside. If you don’t sell you lose it all. Right when you suddenly need extra cash to live.

Asymmetric risk.
KRP
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Re: Seeking advice RSU

Post by KRP »

NabSh wrote: Sun May 28, 2023 8:09 am So I still consider my self new to bogleheads. I spent my early years trying to beat the market without understanding the additional risk that carries.

So one question I have is about the RSU. My understanding is that boglehead advice is to sell these immediately as they are vested.

My thought is someone has given me free money. If I don’t trust the company to grow why do I work for them.

I work for a MegaCorp. They would not grow like Amazon or FB. But they are still expected to grow.

Please help me understand boglehead theory about immediately selling RSUs.
An RSIU vesting is deferred earned income, so not free...you've already worked for it.

But instead of just paying you in cash, your employer helpfully diverted that cash into a tax withholding payment and some company stock, as a default behavior, which you have to manually override in order to diversify. Any additional earned income is helpful of course, but the default form of payment is not unlike why a casino exchanges cash with chips...which is a payment form most assuredly not selected for your benefit.

I would say the end result - deciding this money is "free" - is evidence the intended behavior modification worked...
8301
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Re: Seeking advice RSU

Post by 8301 »

KRP wrote: Sun May 28, 2023 11:18 am
NabSh wrote: Sun May 28, 2023 8:09 am So I still consider my self new to bogleheads. I spent my early years trying to beat the market without understanding the additional risk that carries.

So one question I have is about the RSU. My understanding is that boglehead advice is to sell these immediately as they are vested.

My thought is someone has given me free money. If I don’t trust the company to grow why do I work for them.

I work for a MegaCorp. They would not grow like Amazon or FB. But they are still expected to grow.

Please help me understand boglehead theory about immediately selling RSUs.
An RSIU vesting is deferred earned income, so not free...you've already worked for it.

But instead of just paying you in cash, your employer helpfully diverted that cash into a tax withholding payment and some company stock, as a default behavior, which you have to manually override in order to diversify. Any additional earned income is helpful of course, but the default form of payment is not unlike why a casino exchanges cash with chips...which is a payment form most assuredly not selected for your benefit.

I would say the end result - deciding this money is "free" - is evidence the intended behavior modification worked...
No, companies do not give RSU in place of paychecks for nefarious intentions. It is easy for a company to adjust a compensation to its business conditions with RSU unlike a fixed dollar amount of salary. You also have a stake in the company through the value of your RSU on vesting, not on its future appreciation.
KRP
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Re: Seeking advice RSU

Post by KRP »

8301 wrote: Sun May 28, 2023 1:00 pm
KRP wrote: Sun May 28, 2023 11:18 am
NabSh wrote: Sun May 28, 2023 8:09 am So I still consider my self new to bogleheads. I spent my early years trying to beat the market without understanding the additional risk that carries.

So one question I have is about the RSU. My understanding is that boglehead advice is to sell these immediately as they are vested.

My thought is someone has given me free money. If I don’t trust the company to grow why do I work for them.

I work for a MegaCorp. They would not grow like Amazon or FB. But they are still expected to grow.

Please help me understand boglehead theory about immediately selling RSUs.
An RSIU vesting is deferred earned income, so not free...you've already worked for it.

But instead of just paying you in cash, your employer helpfully diverted that cash into a tax withholding payment and some company stock, as a default behavior, which you have to manually override in order to diversify. Any additional earned income is helpful of course, but the default form of payment is not unlike why a casino exchanges cash with chips...which is a payment form most assuredly not selected for your benefit.

I would say the end result - deciding this money is "free" - is evidence the intended behavior modification worked...
No, companies do not give RSU in place of paychecks for nefarious intentions. It is easy for a company to adjust a compensation to its business conditions with RSU unlike a fixed dollar amount of salary. You also have a stake in the company through the value of your RSU on vesting, not on its future appreciation.
Yes, RSU grants have many beneficial aspects to the company as a whole, and are equally beneficial to company employees when a company is well run (i.e. for the benefit of all stakeholders). The tail risk buried in the phrase "well run" is large and subject to rapid material change.
Last edited by KRP on Sun May 28, 2023 2:26 pm, edited 2 times in total.
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TomatoTomahto
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Re: Seeking advice RSU

Post by TomatoTomahto »

RSUs can be “weaponized” to make it prohibitively expensive to hire someone away to a competitor. Additionally, we have experienced additional restraints on employee behavior (eg, more restrictive non-poaching) that must be agreed to as part of “accepting” each year’s bonus.

I don’t mind the basic idea of deferred incentive comp, both in cash and RSUs, but it seems to me that they have become increasingly used for things other than a straightforward reward for performance.
I get the FI part but not the RE part of FIRE.
8301
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Re: Seeking advice RSU

Post by 8301 »

TomatoTomahto wrote: Sun May 28, 2023 2:12 pm RSUs can be “weaponized” to make it prohibitively expensive to hire someone away to a competitor. Additionally, we have experienced additional restraints on employee behavior (eg, more restrictive non-poaching) that must be agreed to as part of “accepting” each year’s bonus.

I don’t mind the basic idea of deferred incentive comp, both in cash and RSUs, but it seems to me that they have become increasingly used for things other than a straightforward reward for performance.
"Reputable" employers often match unvested equity compensations when hiring.
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TomatoTomahto
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Re: Seeking advice RSU

Post by TomatoTomahto »

8301 wrote: Sun May 28, 2023 3:18 pm
TomatoTomahto wrote: Sun May 28, 2023 2:12 pm RSUs can be “weaponized” to make it prohibitively expensive to hire someone away to a competitor. Additionally, we have experienced additional restraints on employee behavior (eg, more restrictive non-poaching) that must be agreed to as part of “accepting” each year’s bonus.

I don’t mind the basic idea of deferred incentive comp, both in cash and RSUs, but it seems to me that they have become increasingly used for things other than a straightforward reward for performance.
"Reputable" employers often match unvested equity compensations when hiring.
Of course they do, and we’ve been the beneficiaries of that. However, when incentive comp is 80% of what you get annually (ie, you get 20% and 80% is spaced out over 3 or 4 years), it can be costly for a new employer to make you whole. The new employer essentially pays a good bit for the work which benefitted the previous employer. It raises the cost of changing employers, IMO unfairly.
I get the FI part but not the RE part of FIRE.
8301
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Re: Seeking advice RSU

Post by 8301 »

TomatoTomahto wrote: Sun May 28, 2023 3:25 pm
8301 wrote: Sun May 28, 2023 3:18 pm
TomatoTomahto wrote: Sun May 28, 2023 2:12 pm RSUs can be “weaponized” to make it prohibitively expensive to hire someone away to a competitor. Additionally, we have experienced additional restraints on employee behavior (eg, more restrictive non-poaching) that must be agreed to as part of “accepting” each year’s bonus.

I don’t mind the basic idea of deferred incentive comp, both in cash and RSUs, but it seems to me that they have become increasingly used for things other than a straightforward reward for performance.
"Reputable" employers often match unvested equity compensations when hiring.
Of course they do, and we’ve been the beneficiaries of that. However, when incentive comp is 80% of what you get annually (ie, you get 20% and 80% is spaced out over 3 or 4 years), it can be costly for a new employer to make you whole. The new employer essentially pays a good bit for the work which benefitted the previous employer. It raises the cost of changing employers, IMO unfairly.
If the granted RSU vests over 4 years, it is about 1:1 for cash vs. equity compensation which is not unusual.
privateer79
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Re: Seeking advice RSU

Post by privateer79 »

I know the general advice is to sell RSU's (and ESPP for that matter) immediately for Risk reasons, however I like the feeling of having some "skin in the game" in that it makes my work interesting, and it drives to me periodically to "think like an owner". I think behaviorally I end up being a better employee because of it (perhaps sometimes to the consternation of my direct manager who's worried about division/org goals 8-) )

I don't think I've ever gone above 7-8% of total portfolio value (in a mega cap in that case), and I've retained a few % of all of my prior employers
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TomatoTomahto
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Re: Seeking advice RSU

Post by TomatoTomahto »

8301 wrote: Sun May 28, 2023 3:49 pm If the granted RSU vests over 4 years, it is about 1:1 for cash vs. equity compensation which is not unusual.
That is only true for one year, if the RSUs keep piling up. Assuming no increases in annual incentives and base salary (and flat stock price), the first year you get 20% salary 0% incentives, second year 20% salary 20% incentives, third year 20% salary and 40% incentives, fourth year 20% salary and 60% incentives, fifth year 20% salary and 80% incentives.

So, cash and equity are equal only in the second year. Meantime, employer has had the “opportunity” to put more and more restrictions on “accepting” the RSUs each year.

Potential new employer has an expensive buyout and, in effect, is paying the employee’s wages for work done on behalf of the old employer. That’s always the case, but I’ve seen it as extreme as my example.
I get the FI part but not the RE part of FIRE.
happy_statistician
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Re: Seeking advice RSU

Post by happy_statistician »

TomatoTomahto wrote: Mon May 29, 2023 9:27 am
8301 wrote: Sun May 28, 2023 3:49 pm If the granted RSU vests over 4 years, it is about 1:1 for cash vs. equity compensation which is not unusual.
That is only true for one year, if the RSUs keep piling up. Assuming no increases in annual incentives and base salary (and flat stock price), the first year you get 20% salary 0% incentives, second year 20% salary 20% incentives, third year 20% salary and 40% incentives, fourth year 20% salary and 60% incentives, fifth year 20% salary and 80% incentives.

So, cash and equity are equal only in the second year. Meantime, employer has had the “opportunity” to put more and more restrictions on “accepting” the RSUs each year.

Potential new employer has an expensive buyout and, in effect, is paying the employee’s wages for work done on behalf of the old employer. That’s always the case, but I’ve seen it as extreme as my example.
In this scenario you've quintupled your total comp in 4 years so I guess you've done okay.
AnEngineer
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Re: Seeking advice RSU

Post by AnEngineer »

privateer79 wrote: Sun May 28, 2023 4:43 pm I know the general advice is to sell RSU's (and ESPP for that matter) immediately for Risk reasons, however I like the feeling of having some "skin in the game" in that it makes my work interesting, and it drives to me periodically to "think like an owner". I think behaviorally I end up being a better employee because of it (perhaps sometimes to the consternation of my direct manager who's worried about division/org goals 8-) )

I don't think I've ever gone above 7-8% of total portfolio value (in a mega cap in that case), and I've retained a few % of all of my prior employers
I think your unvested RSUs (and ESPP) should be sufficient to accomplish this. If the stock goes up, then you get rewarded by the RSUs having more value when they vest (and the corresponding downside risk).
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TomatoTomahto
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Re: Seeking advice RSU

Post by TomatoTomahto »

happy_statistician wrote: Mon May 29, 2023 10:12 am
TomatoTomahto wrote: Mon May 29, 2023 9:27 am
8301 wrote: Sun May 28, 2023 3:49 pm If the granted RSU vests over 4 years, it is about 1:1 for cash vs. equity compensation which is not unusual.
That is only true for one year, if the RSUs keep piling up. Assuming no increases in annual incentives and base salary (and flat stock price), the first year you get 20% salary 0% incentives, second year 20% salary 20% incentives, third year 20% salary and 40% incentives, fourth year 20% salary and 60% incentives, fifth year 20% salary and 80% incentives.

So, cash and equity are equal only in the second year. Meantime, employer has had the “opportunity” to put more and more restrictions on “accepting” the RSUs each year.

Potential new employer has an expensive buyout and, in effect, is paying the employee’s wages for work done on behalf of the old employer. That’s always the case, but I’ve seen it as extreme as my example.
In this scenario you've quintupled your total comp in 4 years so I guess you've done okay.
No! Did not! The agreed comp was 100, not 20 or 40. It was just 80% deferred. And, if the stock price tanks during years 2 through n, you’re hurting.

Of course did okay, because the previous employer’s deferred comp was bought out by that employer. But it gets tricky if you have one poorly behaving employer who games the comp.
I get the FI part but not the RE part of FIRE.
8301
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Re: Seeking advice RSU

Post by 8301 »

TomatoTomahto wrote: Mon May 29, 2023 10:22 am
happy_statistician wrote: Mon May 29, 2023 10:12 am
TomatoTomahto wrote: Mon May 29, 2023 9:27 am
8301 wrote: Sun May 28, 2023 3:49 pm If the granted RSU vests over 4 years, it is about 1:1 for cash vs. equity compensation which is not unusual.
That is only true for one year, if the RSUs keep piling up. Assuming no increases in annual incentives and base salary (and flat stock price), the first year you get 20% salary 0% incentives, second year 20% salary 20% incentives, third year 20% salary and 40% incentives, fourth year 20% salary and 60% incentives, fifth year 20% salary and 80% incentives.

So, cash and equity are equal only in the second year. Meantime, employer has had the “opportunity” to put more and more restrictions on “accepting” the RSUs each year.

Potential new employer has an expensive buyout and, in effect, is paying the employee’s wages for work done on behalf of the old employer. That’s always the case, but I’ve seen it as extreme as my example.
In this scenario you've quintupled your total comp in 4 years so I guess you've done okay.
No! Did not! The agreed comp was 100, not 20 or 40. It was just 80% deferred. And, if the stock price tanks during years 2 through n, you’re hurting.

Of course did okay, because the previous employer’s deferred comp was bought out by that employer. But it gets tricky if you have one poorly behaving employer who games the comp.
Interesting. According to my understanding which may be
wrong, the higher you are, the heavier is the equity portion of your total compensation. In my case, my equity portion (RSU) is now comparable to the annual salary and the year end bonus is insignificant depending on the preset formula of corporate and division revenues and margins. I will not be surprised if RSU vested surpasses the salary if the company stock does well. Any way, I expect that the company will try to beat competitors in total compensation. Otherwise, it is an open secret that things may turn interesting.
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TomatoTomahto
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Re: Seeking advice RSU

Post by TomatoTomahto »

8301 wrote: Mon May 29, 2023 11:03 am
TomatoTomahto wrote: Mon May 29, 2023 10:22 am
happy_statistician wrote: Mon May 29, 2023 10:12 am
TomatoTomahto wrote: Mon May 29, 2023 9:27 am
8301 wrote: Sun May 28, 2023 3:49 pm If the granted RSU vests over 4 years, it is about 1:1 for cash vs. equity compensation which is not unusual.
That is only true for one year, if the RSUs keep piling up. Assuming no increases in annual incentives and base salary (and flat stock price), the first year you get 20% salary 0% incentives, second year 20% salary 20% incentives, third year 20% salary and 40% incentives, fourth year 20% salary and 60% incentives, fifth year 20% salary and 80% incentives.

So, cash and equity are equal only in the second year. Meantime, employer has had the “opportunity” to put more and more restrictions on “accepting” the RSUs each year.

Potential new employer has an expensive buyout and, in effect, is paying the employee’s wages for work done on behalf of the old employer. That’s always the case, but I’ve seen it as extreme as my example.
In this scenario you've quintupled your total comp in 4 years so I guess you've done okay.
No! Did not! The agreed comp was 100, not 20 or 40. It was just 80% deferred. And, if the stock price tanks during years 2 through n, you’re hurting.

Of course did okay, because the previous employer’s deferred comp was bought out by that employer. But it gets tricky if you have one poorly behaving employer who games the comp.
Interesting. According to my understanding which may be
wrong, the higher you are, the heavier is the equity portion of your total compensation. In my case, my equity portion (RSU) is now comparable to the annual salary and the year end bonus is insignificant depending on the preset formula of corporate and division revenues and margins. I will not be surprised if RSU vested surpasses the salary if the company stock does well. Any way, I expect that the company will try to beat competitors in total compensation. Otherwise, it is an open secret that things may turn interesting.
You are correct in your general understanding. We have generally been lucky with employers, but have had one that really did “weaponize” RSUs and variable compensation. Found reasonable successor employer who did buyout.

More than likely, your equity portion will increase. Depending on industry, your bonus portion will begin to dwarf your salary. Once, my wife’s salary was a small number of thousands more than that of her admin, though her total comp was much higher. Variable comp is effective for CFOs.
I get the FI part but not the RE part of FIRE.
ROIGuy
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Re: Seeking advice RSU

Post by ROIGuy »

I know someone who worked as an executive assistant at Enron, before it was Enron. They worked directly with Ken Lay, etc.
Even though they didn't work there in the 90's, they told me their stock holding was worth about $400,000 at the peak. They said they watched it dropped to $80 a share, but was told to hold on, the price would come back. Same advice as it dropped down to $70, then $50 a share, etc.

Bottom line is they never sold and the company went bankrupt. They told me they eventually got a final check from the company for $265.00
I told them they could either take themselves out to a nice dinner or frame it and engrave the word IDIOT into the frame and hang it above their desk.
8301
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Re: Seeking advice RSU

Post by 8301 »

Mr.BB wrote: Mon May 29, 2023 11:29 am I know someone who worked as an executive assistant at Enron, before it was Enron. They worked directly with Ken Lay, etc.
Even though they didn't work there in the 90's, they told me their stock holding was worth about $400,000 at the peak. They said they watched it dropped to $80 a share, but was told to hold on, the price would come back. Same advice as it dropped down to $70, then $50 a share, etc.
This is one of the well known stories. If you were a CEO in such a situation and received a similar question, how would you answer?
WhiteMaxima
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Re: Seeking advice RSU

Post by WhiteMaxima »

If you work for Apple or nvedia 20 years ago, yiu would regret selling RSU. That all depends on the company you work for.
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TomatoTomahto
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Re: Seeking advice RSU

Post by TomatoTomahto »

WhiteMaxima wrote: Mon May 29, 2023 12:45 pm If you work for Apple or nvedia 20 years ago, yiu would regret selling RSU. That all depends on the company you work for.
Apple and Nvidia had their ups and downs. I don’t have the numbers, but my guess is that if you’d sold RSUs and diversified into SP500, you’d probably be fine also.
I get the FI part but not the RE part of FIRE.
sailaway
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Re: Seeking advice RSU

Post by sailaway »

WhiteMaxima wrote: Mon May 29, 2023 12:45 pm If you work for Apple or nvedia 20 years ago, yiu would regret selling RSU. That all depends on the company you work for.
Not a gambler. I still benefit with each individual jump in price when the next RSUs vest or the ESPP period ends, so I don't spend much time at all worrying about what could have been with a riskier strategy.
dcabler
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Joined: Wed Feb 19, 2014 10:30 am

Re: Seeking advice RSU

Post by dcabler »

NabSh wrote: Sun May 28, 2023 8:09 am So I still consider my self new to bogleheads. I spent my early years trying to beat the market without understanding the additional risk that carries.

So one question I have is about the RSU. My understanding is that boglehead advice is to sell these immediately as they are vested.

My thought is someone has given me free money. If I don’t trust the company to grow why do I work for them.

I work for a MegaCorp. They would not grow like Amazon or FB. But they are still expected to grow.

Please help me understand boglehead theory about immediately selling RSUs.
I would call it an opinion of a lot of bogleheads rather than any sort of standard boglehead dogma.

That said, this is exactly what I do and also how I think of it - free money. Just like ESPP, corporate bonus, and profit sharing. Note that some people don't think of it that way and think of it as part of the compensation package. Sure, whatever. It doesn't change the fact that I don't want to have any more risk beyond my paycheck tied up in my employer. So I sell ESPP and RSU shares as soon as they hit my account. I then take the proceeds and deposit them in my taxable account to purchase my favorite index fund. Rinse & repeat.

Cheers.
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