5 ms·
What's the difference, for the laymen
by doctorbaum 6y ago
What's the difference, for the laymen
- tomerico 6y agoYou only earn money if the stock price appreciate
- closetnerd 6y agoI'm envious of your laymen speak. Exactly right. RSU means they gave you the stock at price X. Options mean, they gave you the right to buy the stock at price X sometime in the future.
- dominotw 6y agoso its like call options where employer eats the option fee?
- TheCoelacanth 6y agoYes, except I think they usually just issue new stock when you exercise and dilute the existing owners instead of actually paying someone else for an option.
- iso1210 6y agoSay Spotify's share price is $100, and as part of your compensation you are given an option to buy 100 shares at $100 in 5 years time If Spotify in 5 years time is $500, you buy 100 shares for $10k, and immediately sell them for $50k, making a $40k profit (or you keep them). If Spotify in 5 years time is $102, you buy 100 shares for $10k and sell for $10,200, making $200 If Spotify shares in 5 years times is $90, you don't bother buying the shares, but your options are worthless. Now imagine you were given 100 shares instead, but couldn't sell them for 5 years (an RSU - or restricted stock unit) In 5 years time, if Spotify is $500/share, your shares are worth $50k In 5 years time, if Spotify is $102/share, your shares are worth $10,200 In 5 years time, if Spotify is $90/share, your shares are worth $9,000
- maria_weber23 6y agoYeah this model sucks, unless they give you A LOT more of these options than they would give you RSUs. Then it could work out, if you believe in the company.