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0 pointsdasil0033y ago0 comments

Well first of all, my point was that over the last decade Google has likely paid more individuals 7 figures than JS or Citadel has. Obviously this is subject to the risk of stock performance, and if your point is that cash is better than stock, I agree with you 100% (especially today when tech stocks are still arguably over-valued).

On the other hand, this, my friend, is absolute nonsense:

> Anyone with a base salary of $300k can obtain a similar payoff structure by taking out a $550k loan to invest in GOOG, and taking out additional smaller loans at each stock refresh.

This is only equivalent if you ignore downside risk, which in the case of an average young professional with no significant assets could ruin you. The RSUs give you significant upside over 4 years with absolutely zero risk.

Also you said this:

> The fact that a particular investment decision (GOOG) can accidentally push the individual's yearly increase in net worth past $1M

This makes me think you might not understand how RSUs work. They are W-2 income at the valuation at the time of vest. What we're talking about is 7 figure annual income. Not investment gains over time.

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kortilla3y ago

> Well first of all, my point was that over the last decade Google has likely paid more individuals 7 figures than JS or Citadel has

No, they granted stock initially and set aside those shares for the employee. The market paid the employees the gain between the initial grant price and the sell.

> This is only equivalent if you ignore downside risk, which in the case of an average young professional with no significant assets could ruin you. The RSUs give you significant upside over 4 years with absolutely zero risk.

You didn’t understand the example. The person taking the loan gets $300k/year cash and the Googler gets $180k/year. Setting aside $120k/year for the loan makes the risk the same so you won’t be “ruined”. Google failing in either scenario means they each have $180k in annual cash leftover.

dasil003OP3y ago

No, I understood the example perfectly, it's you who doesn't seem to understand the downside risk. You would need a $480k loan to buy the four years of stock because you are buying it before you've done the work to earn the $480k. A loan is something you have to pay back, so if the stock tanks you have to make up the difference. In order to be equivalent, the terms of the loan would have to be pegged to the stock price on the downside (so if stock price was cut in half you would only owe $240k), but not on the upside (so you get all the gains). No one in the world will give you a loan with these kinds of terms.

hansvm3y ago

That's only relevant if you're leaving Google before the 4yr period is over and also if you don't know roughly what subset you'll stay for (where you'd just take a smaller loan to represent the first N years of vesting).

Also, the cost of options to completely mitigate the incremental risk beyond that of an ordinary Googler is small (cumulatively a little less than the cumulative cost of interest for the loan). It's a small point that matters if you go out to actually implement the idea, but in the context of comparing Google (X total cash equivalents in their normal structure) to some other company (X salary), the investment opportunities in GOOG are sufficiently comparable that it might be reasonable to upweight Google's TC to 1.1X or so (or downweight it because you're restricted to GOOG itself and don't have more options), but I still think it's unreasonable to call it anything like 3.5X. Those aren't million dollar contracts; they're $X contracts paired with a forced investment that anyone else could choose to make without a huge downside (ignoring the much rarer actual $X contracts).

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