When you’re negotiating your compensation package, it’s easy to focus on the salary and maybe even the number of stock options you’re being offered. But how often do you consider the vesting schedule and how your equity accumulates over time? This is something I didn’t fully appreciate during my early career. Looking back at my negotiations from 2010 to 2012, I realize how critical it is to understand these elements, especially in today’s competitive job market.

What You’ll Learn in This Episode: 

• Vesting Schedules: Know your company’s vesting schedule; it influences financial planning and retention.
• Tax Implications: RSUs are taxed as ordinary income upon vesting; companies often use sell-to-cover to handle taxes.
• Market Trends: Stay informed about RSU trends, such as downside protection, to negotiate better deals.
• Financial Impact: Negotiating RSUs affects your financial future; focus on stock quantity, vesting schedules, and perks.
• Professional Advice: Consult a financial advisor to manage and maximize your RSUs effectively.

I’m excited to share insights with you on this episode of Tech Careers and Money Talk, hosted by Christopher Nelson. We dive deep into the world of Restricted Stock Units (RSUs) and their growing use in equity compensation, particularly in the tech industry.

If you don’t already know, RSUs are a type of equity compensation where you’re granted company shares, which vest over a specific period. Unlike stock options, RSUs don’t have an exercise price; the shares are given to you outright once they vest. This means you receive the full value of the shares on the vesting date, making them a powerful component of your compensation package.

Companies like Microsoft and Facebook have led the charge in utilizing RSUs. Facebook, for instance, was one of the first to offer RSUs before its IPO, followed by Twitter, which saw a significant influx of employees navigating the  This shift has set a precedent for many other companies, including newer tech giants like Stripe and Instacart.

Understanding RSUs isn’t just about knowing you’ll receive shares. It’s crucial to grasp the tax implications. RSUs are considered supplemental wages, akin to bonuses, and are subject to mandatory withholding for taxes. Typically, companies use a sell-to-cover method, where a portion of your shares is sold to cover your tax obligations, leaving you with the remaining shares.

In today’s market, we’re seeing some interesting trends with RSU packages. Some companies offer downside protection, ensuring that if your stock value falls, you’re compensated with additional shares. Others are experimenting with varied vesting schedules, like Google’s immediate vesting for higher positions or Amazon’s back-loaded vesting to retain employees longer.

Negotiating your RSU package can significantly impact your financial future. It’s not just about the volume of stock but understanding the vesting schedule and maximizing your return on time and talent. Always remember, you’re trading your time and expertise for equity, so make sure you’re getting the best deal possible.

If you’re navigating an equity package, consider reaching out to a financial advisor who specializes in tech compensation. They can provide invaluable guidance on how to manage and maximize your RSUs, ensuring you’re prepared for the financial and tax implications.

Equity compensation is a game-changer, but it requires careful planning and understanding. As the tech landscape evolves, staying informed and strategic about your RSUs will help you make the most of your career and financial goals.

TRANSCRIPT: 

Christopher Nelson  0:00  

The volume of stock that you’re getting, but the vesting schedule and what you get over time is something people don’t intuitively think about. And I know for myself, you know, 2010 2012 and all these times that I was negotiating for, it wasn’t in front of me. I didn’t think about it, but it is a critical aspect. I think today and as companies, you know, there have been around a layoffs. I think for great talent out there. I think there’s always going to be competitive marketplace because more companies are going to start growing out of this next phase. I always say it’s about the return on time, you’re trading your time and talent for equity, so you want to maximize how much you can get per year.

Welcome to tech careers in money talk. I’m your host, Christopher Nelson. I am excited to introduce everybody today to Landon Lovell. Landon is a Certified Financial Planner with kBw financial advisors. He has been helping young professionals with financial plans since 2009, which I think the interesting note is after 2008, he decided to get into financial planning. We’ll touch on that in a moment. He specializes on helping technology employees, especially with financial plans. And he regularly posts a blog on the KB advisors financial website, I’m going to put that in the show notes because I personally have been reading this for over a year I get a ton of value out of this as well. 

Fun fact is when he is not assisting clients. He enjoys kayaking down the duck River, and spending time with his wife Melissa, and their three children in Columbia, Tennessee. Welcome Landon. Yeah, thanks for having me, Christopher. My pleasure. My pleasure. And so I want to dig right into this. I think today in today’s market, we’re seeing RSUs being used a lot more for equity compensation. And I want to spend some time educating people on a little bit on the history of RSUs. I know that RSUs, you know, started popping their head up in the early 2000s. And I think it’s some point Microsoft switched to RSUs. 

And in many public companies started using those. What is can you give us some more, you know, information and education on RSUs. Yeah, and one of the other, you know, big names that everybody knows who was, you know, as far as I know, the first to go to our issues prior to an IPO was Facebook. And then the first time that we started dealing with our issues in an IPO in a big way was was Twitter. And so Twitter was, you know, part of that early wave that started moving from Silicon Valley into San Francisco. 

And so especially the start of 2014 and 2015, we had all these Twitter employees contacting us and saying, I just got a W two with a million dollars on it, I don’t make a million dollars, you know, is this right? Did they make a mistake, and kind of freaking out, you know, over tax situation that they had no idea what’s coming, right. And so

breaking it down real quick for people is restricted stock units, is a type of equity compensation, where you get a grant that says over this particular vesting schedule, and we’ll stick to the traditional four year vesting schedule, you get this many shares that are going to be vested to you over time. And it is not a partial share vest, that means that when you vest that you actually get ownership of those shares immediately. They get that right.

Landon Loveall  4:01  

Yeah, that’s correct. And so when we talk about restricted stock units, and we compare him to stock options, one of you know, kind of the key differences there is restricted stock units are a full value award. So there’s no exercise price, you know, whatever you’re granted in terms of a number of shares, you’re going to get all of that. And there usually is a time based vesting schedule. And vast is when you know the shares effectively become yours. The other key event is release or settlement, which is the point at which the shares are transferred into your ownership they show up in your account. 

And it’s also the point at which the value of those shares become taxable to you. And the reason that I mentioned that is prior to IPO, we’re usually dealing with double trigger already. Shoes where you’ve got the time based vesting schedule, which is the first trigger. And then you have the event based that can trigger, which is the point at which the AR issues actually become taxable. That’s before IPO after IPO vest and settlement, they’re effectively the same event. Right.

Christopher Nelson  5:20  

And RSUs, at this point are the staple for public companies, companies that are already public the way that they grant equity compensation to technology employees. And I want to try and separate this conversation out because I think, day I do want to dig into the pre IPO because I think that’s becoming more prevalent. I think that’s important. But I want to make sure that people are educated on the basics with the fact that when you’re working for an already public company, and you then go into negotiate, and you have an RFQ package, when you get to that particular vesting date at that date, you’re going to be received the full value of the share, and then it will also be released to you as well.

Landon Loveall  6:04  

That’s correct. And the other important thing to know, there is, you know, restricted stock units for tax purposes are considered a supplemental wage. So they’re like, you know, the annual bonus that you may have already been getting at SAP instead of coming to you in the form of cash, they come to you in the form of shares. 

But the reason that’s important to know that there are supplemental wage is there is mandatory withholding. So the most common, you know, scenario that we see for that mandatory withholding is a sell to cover where typically you’re going to get, you know, about 60% of the shares that actually vest and the other 40% are going to be sold to cover federal and state income tax as well as social security, Medicare and some of those other smaller benefit taxes.

Christopher Nelson  6:55  

There are three options when when that day comes, there’s the sell the cover, same day sale, and there is cash transfer. I know for myself, I was a sell to cover guy that that was just the easiest, most automatic way, do you ever see any use cases where a same day sale or cash transfer is, is a valid use case. So

Landon Loveall  7:20  

sell to cover is the most common, and it’s often the default. So if you, you know, if you don’t do anything, usually, you know sell to cover is going to be done for you. Same Day Sale, some companies will give you that option, or you know, they’ll have kind of a boilerplate trading plan where you can opt in to a same day sale. And if that’s available to you, for a lot of the people that we work with, it’s a really good, good option. Because then we don’t have to worry about under withholding. And a lot of times after the IPO, our default strategy for those are issues is going to be to look to sell them as soon as possible. And then to work that into your larger investment plan. Cash Transfer, I don’t think I’ve ever been involved in a cash transfer. I’ve worked with clients where that was available to them. 

But usually when that’s on the table, there’s a good chance that you’ve got a tremendous amount of equity already. And so you’ve probably contacted me because you’re concerned about the amount of concentration that you’re dealing with, and wanting to diversify anyway. And so cash transfers are going to be the opposite of addressing that, you know, concentration issue. And so a lot of times we use, you know, sell to cover same day sale as a just kind of an easy first step before we deal with some of your prior equity to stop the concentration from growing moving for.

Christopher Nelson  9:00  

Right. Right. And those are those are key strategies. And so let me let me ask you a couple questions. I’m curious what you’re seeing in the market today, around public company RSU equity packages, because as I as I’m out there, talking with friends and people in my network, I’m seeing some very interesting variances to these plans that that are, I think important for just people to know especially when they’re in the negotiation phase. 

So I am seeing there are some plans now coming out RSUs that provide downside protection, meaning that if if you’re getting a $250,000 salary, and then you’re also getting matched $250,000 a year in equity, if the equity value goes below that they then give you extra shares to shore that up. Have you been seeing some some different equity plans to give people downside protection?

Landon Loveall  9:58  

I have not seen that specific Typically now I see companies do that effectively, even if they’re not expressing that on the front end. And so going back to especially 2022, and then 2023 2022, we had the layoffs 2023, you know, we started to kind of come out of those layoffs and the people who were still with those companies, you know, in some cases, the companies recognize our stocks not performing the way you expected it to, when you were granted your RSUs, we’re going to give you some larger than normal refresh grants to account for the fact that, you know, this original grant is, you know, way below the value you thought you were getting, even if it were just cash, you know, that you’ve basically lost money on the fact that this grant was in the form of Shared Equity and not cash. 

Now, one thing that I am seeing is on new grants, some companies starting to give tech employees the choice. Okay, we’re giving you this value $400,000 over four years, would you like that? All in our issues? Half in our issues, half in cash, or 75%? In cash 25%. And our issues? I am seeing that, you know, we’re prior to the last couple years, I really never saw that.

Christopher Nelson  11:30  

I think that’s an interesting development. One of the one of the other things that I’ve seen, I think, is I’ve started to see. So I told you about the downside protection, where that was actually written in up front where they would shore that up again, that was RSUs. The other thing that I’ve seen now is I’ve seen some variance to the vesting schedule. So we’re all familiar with, you know, straightforward, split into four equal buckets. And you have the one year cliff, I have seen some people starting with immediate vesting, so you can start vesting in the first month, we’ve seen Google that does that, I think for directors and above, then we’ve seen the back investing that Amazon does to retain employees, the thing that I in a recent trip to the Bay Area is I was talking to some friends that were interviewing some different companies as they’re now starting some front end vesting schedules, you know, especially as things are getting more competitive, especially around different AI talent. 

They’re doing a 5030 20. So you get 50% of equity in the first year 30% and 20. And it turns out, the grants aren’t going to be is large, let’s maybe say they’re 75%. And then you get to take 50% off in the first year. But they also then evaluating to say, okay, for for the following years, are we going to then refresh you at a higher rate? So it seems like they’re, they’re, they’re moving forward with with, Okay, we’re gonna let you take more equity off the table up front, but then both of us get to decide, is this a good relationship that we can continue investing in over time?

Landon Loveall  13:06  

Yeah, the immediate vesting, that’s definitely becoming a trend that I’m seeing more and more, and it’s across the board, regardless of you know, of company type, or company size. And the front loaded vesting, I haven’t seen that so much as a trend, but I have seen it as a tool that companies will use when they’re in kind of a competitive negotiation, you know, one of the things and clients have kind of caught on, but in years past, I would really struggle to get, you know, clients to ask for more, you know, you know, go go back to them, you know, unless you’re unhappy where you’re at, and you’re looking, you know, at this new opportunity as your way out, or you’re just so excited about the work that, you know, you’re you’re ready to go and you’re not going to worry too much about the comp package. 

Just ask for more, you know, because especially if you’re talking about a public company, by the time they get to giving you an offer, they’ve invested a lot of time in you, they really want this to work, you know, by that point, you’re probably the only person that they’re talking to. If this falls apart, they got to start all over again. 

So this is your opportunity to ask for more. And in some cases, when I would get clients to do that, that’s what the companies would come back with, they would say, well, you’re at the top end of the range that we’ve got for this position. But here’s what we can do, instead of getting your RSUs over four years, we’re going to do kind of a standard grant over four years, but then we’re going to take that and break it out into an additional grant that’s going to be accelerated into that that first year to where you’re going to get more of what we would have given you up front and you’re not going to have to wait is long to get it. So that’s a case where I’ve seen, you know, those front loaded grants,

Christopher Nelson  15:05  

I think it’s so important that people are aware of, you know, when you’re negotiating that there is, you know, the volume of stock that you’re getting. But the vesting schedule, and what you get over time is, is something people don’t intuitively think about. And I know for myself, right, when I was negotiating equity in, you know, 2010 2012, and all these these times that I was negotiating for it. I wasn’t in front of me, I didn’t think about it. But it is a critical aspect. I think today, and as companies, I think, you know, there have been around a layoffs, I think for great talent out there, I think there’s always going to be, it’s always going to be a competitive marketplace, because more companies are going to start growing out of this next phase, it’s, you need to understand what are the different levers that you can pull to be able to get, I always say it’s about the return on time you’re in, you’re trading your time and talent for equity. So you want to maximize how much you can get per year, every year? Yeah,

Landon Loveall  16:07  

absolutely. And then, you know, the big risk. So when we talk about equity for tech employees, that’s what makes tech different, you know, then, than really any other industry, in terms of the employee experience and how compensation works. But the other thing about that equity is, it’s until it’s yours, it’s dependent upon you keeping that job. And so the big risk for any employee, whether equities involved or not, is, you know, for the most part, the company can at any moment in time to sign that you’re not needed anymore. And then that equity, you know, goes away.

And, and so that’s the challenge I get really excited about about kind of helping my clients navigate, because located where I am in Tennessee, you know, we’re right outside of Nashville, but they’re still kind of that small town feel and function here, where you’ve got these family, businesses, families, all businesses, and so you’ve got second and third generations that are benefiting from the work of their parents and their grandparents. 

And there’s property and equity there. That is there’s, you know, there’s no company that decides, we don’t need you anymore. But as a tech employee, you know, there’s always kind of that risk that you could spend your entire career working. And you know, and come out of it with not a lot to show for it. And so the vesting schedules are important to understanding how the value of the equity and thinking about your career as a whole over the entire time that you’re going to work and the amount of money that’s involved, which really adds up, you know, the income levels that we see whether we’re just talking salary, and before we even get into the equity piece. Yeah. Yeah.

Christopher Nelson  18:03  

And that’s, and that’s why I think understanding and managing the equity is so important. And you know, what, what my family and I did as a strategy Landon was, we wanted to live within our salary, we leveraged our bonus for larger expenditures and family vacation, and then the equity was just that investment that was to move on to the side to create something in what we’re going to get to that and talk a little bit more in the second half of the show, about how that then became, you know, our, our business that’s going to propel our family forward, as we’re still talking about RSUs. 

Let’s talk about this trend. Now that you saw with, with Facebook, because I think Facebook started when they were early stage, they did have ISOs and incentive stock options, but at some point, when they were private for a long period of time they converted to RSUs. I know, I know, Stripe did the same thing. Obviously Twitter did so there is a trend. What do people need to understand are the differences between ISOs and RSUs? When they’re getting, you know, private company stock,

Landon Loveall  19:12  

and it’s a definite trend. And then you mentioned stripe and tripes an interesting one because they these companies are now waiting so long to go through an IPO. You know that last year stripe had to raise money just to pay taxes on our issues, because, you know, they were facing the possibility that current and former employees were going to have there are issues at spire because they did not want to, you know, go through an IPO and in that market, and then with Instacart, you know, in their IPO last fall, working with folks there, one of my clients told me you know, they’ve told us that there’s only like a 180 of us still working here who have incentive stock options. So it’s really early on, you know, especially when you start getting past that billion dollar valuation that we see these companies making this switch from using stock options to using restricted stock units. 

And when we talk about incentive stock options, you know, the stock option piece, first you’ve got an exercise price, so you have an out of pocket cost to buy the shares that those options represent. Whereas with restricted stock units, you don’t have any out of pocket cost, the taxes are different. So incentive stock options, the exercise of incentive stock options is not a taxable event for the regular income tax, then we’ve got this whole other, you know, alternative minimum tax that we have to navigate. And I do my best, I feel like I’m pretty good at at making it simple. But usually, when I explain it to someone for the first time, you know, they just look at me and go, like, who, who thinks of this? This is, this is how our tax code works. 

You know, when you get a bunch of people and legislative process involved, you know, this is what we end up with. So incentive stock options, you’ve got the alternative minimum tax, and all of that, to think about restricted stock units, you don’t for tax purposes, restricted stock units are fairly straightforward. Once the shares end up in your brokerage account, 100% of that value on the day that they release or settled to you becomes taxable, and it becomes taxable as ordinary income.

Christopher Nelson  21:48  

Right? And with pre IPO, RSU shares, that’s where you have the double trigger. So you vest and you actually own the shares. But they’re not at that point deposited in your account that’s going to happen post IPO. Is that correct? Yeah,

Landon Loveall  22:04  

that’s correct. So, you know, prior to the IPO that vast, and if you leave the company, they go with you, they are yours, you just do not have ownership of them, or possession of them, so that they have not yet become taxable to you. So in the IPO, one thing you know, that can kind of catch people off guard is, you know, you may have four or five, six years of restricted stock units that have vested that are now going to become taxable in a single event. And so you’ve got your income, which prior to the IPO has just been salary, and whatever cash bonus, you’re receiving, usually pretty consistent, year after year. And then you hit that IPO year, and you may suddenly rocket from, you know, a 24% tax bracket all the way into a 37% tax bracket. And start dealing with numbers related to taxes and tax bills that are just really hard to wrap your mind around having never dealt with that before.

Christopher Nelson  23:17  

Here’s what I think the biggest struggle is having been somebody who’s who’s been through this is when I’m having to write a check to the government that’s larger than anything that I even brought into my bank account yet or I’m holding on to is like real tangible cash and assets. That’s where I think it’s hard because you feel like you’re giving more than you’re getting. And I’ve been doing the hard work. So that’s where writing that first big tax check is like, what was it like you go through all the stages of grief, like you’re dealing with the loss, you know, there is there is denial, you do fantasize about running off to South America or Switzerland somewhere, knowing Sure well, that the government will track you down. 

But that’s that is really important. And so when technology employees are thinking about, you know, getting a grant of pre IPO RSUs it’s so important that they understand when they’re getting the shares, what are the current values of the shares? Does with RSUs? What is the most important thing for them to understand of the pre IPO values of the shares? Is there any risk to them, like a exercised Eisah would have,

Landon Loveall  24:31  

I don’t think there’s any risk to them and with restricted stock units when we talk about kind of the most important thing to understand. So prior to IPO, you know, whether it’s startup or it’s, you know, a company that’s been around for a while that’s raised, you know, a number of rounds. The thing that, you know, clients that will really struggle with trying to quantify what they’re being granted in their equity inside Oh, prior to the IPO, a lot of times they’ll go to, you know, the number of our issues or options, or the percentage of the company that they’re being granted. And I tell them yeah, you know, that that’s, that’s great. 

And being granted more, you know, is is better. But the price, you know, what’s that that big unknown variable, the future liquidity event and the price that you’re going to be able to sell out. And so whenever I’m working with someone prior to an IPO, I just start really encouraging them to think about that future exit that we’re planning for, to really start thinking about that in terms of of price, you know, what is the price in the future that I’d like to sell out, especially if we get to where, you know, we’re done with our issues. And we’re done with stock options. And now we’ve got shares that you’re holding on to and we’re trying to make that investment choice of when is the best time for you to exit that position, really start thinking about what’s the price that I’m happy to sell at, but most of them prior to the IPO, if they’re getting our issues, they’re hoping for the IPO, and then they’re not really thinking about, you know, anything else in terms of the our issues? 

So when, you know, kind of thing to consider is, at what point does it make sense for me really to, you know, to think about getting some help with this. And that’s a very personal choice. But you know, it’s definitely like when you get to the point where you’re going, Okay, this might happen this year, or it might happen at the start of next year in terms of the AI, it would really be a good time to to start working with someone and get a really good understanding of what do I have? And then the IPO? How is this going to work for me? What are the things that I need to know what are the mistakes that I should avoid?

Christopher Nelson  26:55  

I think that’s, that’s what RSUs I think, if you have ISOs, my, I always recommend it like as soon as you get those because one of and again, I know this is this isn’t a show about ISOs. But I just want to touch on something like I, in my last IPO with Git lab, we had the opportunity to do early exercise, meaning that I could eliminate AMT, if I believed in the company and wanted to make the investment I own dollars up front, which we ended up doing for a portion. We said, Okay, let’s go long on this portion. 

But that was something that was a result of having been through a couple IPOs before having had a team in place like I was able to understand, Okay, I am going to take a position in this company, I’m going to lower my tax burden, I’m gonna go long on this small set of shares. And here’s gonna be my investment. If you’re just starting out, trying to get you know, tax help, trying to get some, you know, fee only financial advice so that you’re not, you know, feeling any pressure, but you’re starting to surround yourself with influence information, education, and understanding what’s going to happen when I think is critical.

Landon Loveall  28:06  

Yeah, absolutely. I agree. And, and so with incentive stock options, you know, I tell folks, there’s, there’s kind of that early opportunity, you know, real early on, when you’ve just started, where there’s not a lot of difference between your exercise price and the value of the company, you know, you’ve got a window there. And then you enter this kind of desert in the middle where there’s a big gap between your exercise price and the fair market value of those shares. And the alternative minimum tax just keeps getting bigger every year. But you don’t know when you’re going to have an exit. That’s really tough. And then there’s kind of right there, your next really good window is right around that IPO. And then we get into the question of how much risk are we going to take around an IPO? You know, that maybe it happens, maybe it doesn’t. And so incentive stock options that are a whole nother thing, and they’re a lot of fun, you know, for me, because of all the different variables and kind of the combination of things that we can consider doing. 100%

Christopher Nelson  29:16  

I think that’s and that’s, I think that’s actually worthy of a another show, you know, because you we can go down all the nuances there. One of the things I wanted to touch on because I know that you’re we talked about at the beginning is what do employees need to know about their pay stubs when it comes to equity compensation because I know pay stubs then have relation to, you know, taxable events and those things.

Landon Loveall  29:42  Yeah, absolutely. So, prior to equity comp, they come in taxable, you know, your pay stub your direct deposit every other week. It’s all standard, straightforward. You get a W two at the end of the year, you file your taxes. So a lot of times As our clients, they’re typically going to be around 35 years old, you know when they reach out for the first time. And so they’ve got 10 years of their career where they’ve gotten accustomed to kind of this regular pay stub that they get. But now when you’re dealing with our issues that start to settle and become taxable, you’re all of a sudden going to be getting pay stubs, but no direct deposit. 

And so now you’ve got this whole new thing going on. And so when we talk about equity comp, you know, there’s two pieces there, there’s the equity, and there’s the comp, so, property and income, and you’re going to have things that are going to be reported on your pay stub that are going to end up on your W two. And now you’re going to have to match what’s going on on the pay stub and the W two to what’s being reported at each rate or Schwab on a 1099 b. And make sure that when you file your taxes, that those two kinds of pieces, the capital gain the property side, and the income the W two side that they match up, and that you avoid getting taxed twice on the same income. If

Christopher Nelson  31:08  

you were going to run through a a process and say, Okay, you get your your pay stub, you get the cash plus pay stub, what are what are some of the two things that were three things that you would do right away to just sort of verify that? Yeah,

Landon Loveall  31:22  

so initially, it is just the pay stub, and you’ve got to wait until the end of the year to get those other tax documents to then be able to do kind of the audit and the accounting to draw the line through. But starting with that pay stub, you know, and we mentioned supplemental withholding earlier. So that’s super important. And it relates to the pay stub because one thing that, you know, new clients who are dealing with this for the first time will sometimes say to me is they sold a cover their withholdings, so I’m good, you know, the taxes are taken care of. And what they don’t realize is supplemental withholding is 22%. 

Federal that standard. And the majority of our clients, you know, are not in a 22% marginal tax rate. And so I start to tell them, Look, every time those are issues released and settled, you get that pay stub, your tax bill coming due next year is growing. And the pay stub lets us quantify that. So we can verify looking at your federal income tax that was withheld at what rate? Was it withheld from those are issues. So you take the federal withholding divided by the RSU income on that pay stub? And if it’s 22%, you know, okay, I need to know red flags, I need to start to pay attention to what’s going on here. Really good chance I’ve got a big tax bill coming next April, I

Christopher Nelson  32:57  

think that’s that’s really, really important is for people to understand that and that to be clear to that’s the 22% federal estate tax may or may not be taken out

Landon Loveall  33:06  

either, right? That’s correct. And so, you know, if we’re talking about a state like California, the standard supplemental withholding rate for California is 10%. So less of a problem there 10%. You know, you may be good 22% federal, you know, once we start getting into hundreds of 1000s, and sometimes millions of dollars, you know, then we’re talking about 10s of 1000s, or hundreds of 1000s of dollars. You know, that’s coming due next April. And especially if we’re talking about, you know, our issues that are being released at an IPO, it becomes really important to pay attention to the settlement date. The withholdings, right, and then the day that you can actually start trading because, you know, depending on how all of that falls, we’ve got a plan for how are we going to pay these taxes? When am I going to be able to sell these shares if I need to sell more than what was sold for the standard withholding.

Christopher Nelson  34:12  

So important? Well, I know you and I could continue to talk about RSUs all day long. But I think the big takeaway here is that, you know, RSUs are a staple for public company equity compensation. It’s now being seen more and more, especially in late stage private companies get educated. I’m going to put a couple of links to some of your blog posts. I think you have some very, very well written blog posts on RSUs.

Thank you so much for joining Landon. And I and this conversation about RSUs RSUs are such an important part of tech equity compensation because for public companies that Give you guaranteed liquidity because they’re already public. That is the main type of equity compensation that they provide. So understanding what they are, how they impact you is critical. If you want to know more go to tech careers and money news where we’re we have on the website and RSU primer so that you can dig in and understand more. And also check out our YouTube video as we will have some instructional videos around how to understand and manage your RSUs thanks so much for joining. See you next week.