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Save money and increase your wealth by taking advantage of corporate benefits. Typical corporate benefits include 401(k), ESPP, health insurance & more.

The Ultimate Guide To RSU Compensation

08.24.2020 by admin // 1 Comment

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Restricted Stock Unit compensation (RSUs) is a popular way of giving company equity to employees at tech startups and large public companies. When you hear about how much money people at tech companies make it’s often because they have equity as part of their compensation package. When looking at your compensation package don’t just look at the salary. Also understand what your benefits are worth including your RSU package. Often we look at benefits like health insurance and retirement options like the 401(k) company match. But, what about equity compensation? Equity compensation is a perk companies use to give you an ownership stake in the company. This includes RSUs, ESPP and employee stock options.

If you don’t have RSU compensation today, you are missing out. If your company offers RSU packages as one of their benefits, negotiate for RSU compensation during your next merit raise cycle or during your next promotion. Or, apply to companies that offer Restricted Stock Units as part of their compensation package. Learn below what RSUs are, what RSUs are worth to you, when you get RSUs, RSU tax considerations and the drawbacks of RSUs.

What Are RSUs or Restricted Stock Units?

RSUs, or Restricted Stock Units, are a form of compensation offered by employers to employees. They are company shares that are restricted, meaning that you can’t sell them right away. Instead, you will be given shares that vest over time. When you accept RSUs, they will come with a vesting schedule. Often, you’ll see vesting schedules that span 3+ years. This schedule will show how many shares will vest on which dates. Typically, there will be one day per year and each of those days will be a year apart. On that date you are given those shares at the price of the stock that day. They have no tangible value until the vesting date. If you leave the company before the vesting date that means you walk away from this future compensation.

What Is RSU Compensation Worth to You?

The value of your RSU package depend on a few things: the number of shares offered, how well the stock is projected to do and the vesting schedule.

How Much Are Your RSUs Are Worth When Granted?

To understand the current dollar amount of your restricted stock options multiply the number of RSUs by the stock price the day it is granted. When considering a job offer with RSUs, they may provide a dollar amount for RSUs. If you are provided a dollar amount, that means your RSU package will originally be worth that amount no matter what the stock price is. The day the RSU package is granted, you’ll know how many shares equate to that dollar amount.

How Well Do You Think The Stock Will Perform?

Consider how well you think the stock will perform during your vesting schedule. Is it a growth stock or value stock? Here, I’ll compare a growth stock (Amazon) to a value stock (Cisco). On January 1, 2019 Amazon stock was worth $1718.73. In comparison, Cisco was trading at $47.29. On August 21, 2020 Amazon traded at $3,284.72 a share and Cisco traded at $42.25 a share. That is a huge difference! If you had accepted a job offer at Amazon your RSUs are worth almost double! If you accepted the job offer at Cisco your RSUs actually decreased in value. Even with the quarterly dividend of $0.35 a share, your RSUs are still worth less. Note, this is one example of past results, and this doesn’t mean either of these stocks will perform similarly in the future.

When comparing compensation packages at two companies, don’t only look at what the RSU package is worth at that moment in time. Consider how you think the stock will perform over the next few years. The lower RSU package may end up being worth more money.

Amount of Time For All Of Your RSUs to Vest

Know how long it will take for your RSUs to fully vest. How long do you have to stay with the company to get the full RSU package? Do you intend to stay with the company for that amount of time?

When Do You Get Restricted Stock Units?

Typically companies offer RSUs at time of employment. Other opportunities to get RSUs include promotions. Similar to annual merit increases, some companies have annual equity awards. Once a year they give RSUs out to select employees. If you’re unsure if your company offers RSUs, go to your internal benefits page and see if it’s one of the benefits listed. You can also ask your manager or HR business partner. When you’re talking to them, ask them the criteria for getting RSUs. It can never hurt to ask.

Do I get RSU Money Right Away?

Usually you don’t get RSU money right away. RSUs typically have a vesting period. A vesting period is a period of time before the shares are owned by the employee. If you leave the company before the end of the vesting period you’ll walk away from those shares.

Cliff Vesting – after a certain amount of time has passed you will receive 100% of the shares all at once. For example, say you are granted 30 shares. 3 years later you get 30 shares all at once. The date you get all of your shares depends on what is in your RSU agreement.

Graded Vesting – you will receive smaller chunks of your RSUs more frequently. For example, say you are granted 30 shares in January 2021. In graded vesting you could get 10 shares in January 2022, 10 shares in January 2023 and 10 shares in January 2024. The dates you receive the small chunks of RSUs depend on what is in your RSU agreement.

Hybrid of Cliff and Graded Vesting – You receive a certain amount at once, and then smaller amounts at regular intervals following that. The dates you receive a certain amount all at once and the dates following depend on what is in your RSU agreement.

How are RSUs Taxed?

RSUs will not be taxed when you first receive them. But, they will be taxed upon vesting. This is because you were given RSUs at $0 and they converted to the value of the company stock when they vest. Even if the stock goes down the very next day, you will be taxed at the total fair market value of your stock grant on the grant date.

When you sell your RSUs your taxes will be calculated based on the strike price. The strike price is the price of the shares when they become vested. Upon vesting, this is when you get to decide if you want to keep the shares or sell them. Whether you decide to keep or sell the shares, you will get taxed upon the shares vesting.

To avoid getting hit with a huge tax bill your company may have an option to sell RSUs at time of vesting to cover taxes. Additional tax withholding options include same day, net shares settlement, sell to cover and cash.

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What Happens if my RSUs go Down in Price After They Vest?

If RSUs go down in price after they vest they will be treated like any other stock that is currently showing a loss. Nothing will actually happen until you sell and the price can continue to go up or down. If you sell at a price that’s below the RSU stock price it will be considered either a short term or long term loss on your taxes pending when you sell.

Do I Have to do Anything When I Get Confirmation I was Awarded RSUs?

Sometimes you do have to do take an action when you get confirmation that you were awarded RSUs. Just because you’ve been told you are getting RSUs doesn’t mean there are no actions on your part. Sometimes you need to accept the RSUs by a certain date or you actually won’t get them! The written confirmation that you get awarding you RSUs should detail out any instructions or next steps you have to take. Make sure you read this written confirmation thoroughly. When you accept the RSUs make sure you know what you are signing, it’s not only about making sure you click accept. Sometimes what you are signing contains a non-compete.

What Are The Drawbacks of RSU Compensation Packages?

Non-Compete Clauses

When you are accepting your Restricted Stock Unit grant, do you know what you are signing? You may be signing a non-compete. If you’ve already signed a non-compete for your employer this agreement may be nothing new. Be aware of what you are signing before you sign. After you sign print a copy for your records in case it’s hard to find after the fact.

Leaving the Company

Restricted Stock Units are designed to incentivize employees to stay at a company. Of course, you can still give your notice that you’re leaving at any time when you have unvested RSUs. However, you’re now putting in notice knowing that you’re leaving money on the table. With vesting, you won’t get the full amount of your award until the vesting schedule is complete (usually 3-4 years). If you get RSU awards every year, that can quickly grow to a sizable amount you’re walking away from. If you leave the company you will forfeit your unvested shares. Any shares that have vested that you haven’t yet sold you will continue to keep.

If you are looking to leave your company, don’t forget to negotiate the amount of unvested RSUs you’d be leaving on the table as part of your negotiation for your new compensation package.

High Risk, High Reward at Startups

Early stage or start-up companies (pre-funding or even after series A) tend to have the valuation of shares as quite low. The opportunity for appreciation is the highest, but there is also a chance your RSUs end up being worth $0.

Ability to Sell RSU Shares Once They Vest

If you work for a publicly traded company you should be able to sell your shares upon the RSUs vesting. If your company is private though, they may have restrictions on when you can sell the equity you’ve been awarded at the company. When you are awarded RSUs, read the terms and what the terms outline for selling vested shares to avoid any surprises.

For quick answers to all Frequently Asked Questions about Restricted Stock Units Fidelity has a FAQ guide that is pretty helpful.

Advantages Of Working For A Large Company As A Young Professional

05.27.2020 by admin // 4 Comments

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Choosing to work for a large company, a small company, or starting your own business can impact the quality of your life. These days there is a lot of advice out there about working for yourself instead of a large company. Certainly, there are benefits to working for yourself but there are also benefits to working at a large corporation, especially when you are a recent graduate. Here are a few advantages for working at a large company as a young professional.

Opportunities for Career Advancement At Large Companies

Most large companies have specific criteria for advancement. At times, this may seem bureaucratic. But, you’ll clearly know what you need to do to get that promotion. For many jobs, there is a clear career path. If you start in inside sales you can clearly see two career paths: advancement to outside sales and advancement to an inside sales manager position. If you’re in professional services like accounting or audit there is a clear career path leading up to partner or a clear path to get promoted to a certain level and then go in-house.

Career Development Opportunities

One advantage of working for a large company is the amount of career development opportunities offered for free. If you work for a large corporation your team likely has money for training and internal training available. They also likely offer training internally, ranging from company specific training to skills training that’s easily transferable. Some companies also offer LinkedIn Learning for free. Don’t hesitate to ask your manager about what training options you have available through your company, or what opportunities there are for external training / certifications.

It’s important to continue learning and acquiring additional skills. You’ve invested in yourself by attending college, but it doesn’t end there. There are other professional certifications and additional degrees that can significantly increase your earning potential such as MBA or another Masters degree, CPA, CFA or PMP. If the external training / certifications will help you in your current job your employer may be willing to partially or fully pay for it. While a large corporation may not pay 100% of these costs, they may have programs that can help partially cover these costs. In fact, this is how I was able to avoid student loans and get my MBA.

Networking Opportunities

It’s important to surround yourself with people you admire. Find someone that has the job you want and learn from them. Surround yourself with people that you learn from, have positive attitudes and you enjoy being around. When you work for a large corporation there are plenty of opportunities to network and find people you admire. Leaders in your company may host lunch and learns. Companies also have employee resources groups and community service opportunities. Both of these serve as opportunities to meet coworkers that you don’t work with day to day.

Additionally, find advocates within your company. At large corporations getting put on projects that are high visibility will help expand your network of advocates. Another way is to join a large corporation as part of a leadership development program. Many decisions will be made about your career when you aren’t in the room. Have people who are in that room that will advocate on your behalf. Sponsors will advocate for you to be put on good projects, considered for new roles and for promotions. They will help push you in the right direction, put you in meetings to help you get executive visibility or expand your network. You are more likely to get a job through an employee referral and will have even greater odds if the person referring you is one of your sponsors.

Formal Mentor Programs

Many companies offer formal mentor programs that you can sign up to be a part of. Mentors will help give you career advice when you don’t know how to navigate a situation and help guide you on topics you discuss. Think of a mentor like a coach. Career advice is especially important for young professionals because the visibility you have so far is limited. Those with more experience or have greater visibility to the bigger picture can help you dream bigger.

Large Global Companies Offer Experiences Working with Different Cultures

When you work for a large corporation you likely have a much broader customer base and coworkers located around the globe to support that global customer base. There may even be opportunities to travel abroad!

It’s very beneficial to work with different cultures when you’re first starting your career. Diversity of thinking, creativity and access to talent anywhere were the top three benefits of global teams found in research conducted by SHRM. The diversity of thought helps you see situations from a different perspective and broadens your mindset.

Ability to Change Jobs Without Changing Companies

Your career path is as much about figuring out what you don’t like as figuring out what you do like. Luckily, at large corporations you can try many different jobs without having to leave the company. It is easier to figure out what you don’t enjoy at a large corporation because the opportunities are endless. This also helps you build transferable skills. Finding your niche skills will allow you to command a higher salary or start your own business down the line.

Are you in marketing and think you’d like sales better? Large corporations have large departments so there are more opportunities to make a career pivot. Want to live somewhere else? Large corporations have a large geographical presence and may even let you keep your current job and allow you to work remotely.

Invest in Retirement Early

Large corporations often offer 401(k) plans and employee matches. Many large corporations offer a company match up to a certain dollar amount or certain percentage amount. For example, if you put 3% of your salary into your 401(k) plan, they will match that 3% and make an equal contribution to your 401(k) account. This is free money.

401(k) plans are also a great investment vehicle when you’re a young professional because you have less responsibilities and you have time. Even if you’re paying down student loan debt, if you don’t have a mortgage and don’t have kids those are major expenses you aren’t paying right now. You’re able to take advantage of compound interest and have your wealth grow over time, faster.

Corporate Benefits Package

Large corporations have a number of other benefits in addition to 401(k) plans. They often offer health insurance, dental insurance, vacation time, sick time, tuition reimbursement and more. Your health insurance may include additional perks like money toward your gym membership and acupuncture. Some companies also offer Employee Stock Purchase Plans which enable you to buy company stock at a discount.

Not sure how much your benefits package is worth? Benefits accounted for 32% for employers cost of compensation for US workers in June 2018.

When you work for yourself, you think you have more flexibility for when you work and hours you work. While this is partially true, it is much easier to put on an OOO on during vacation when you work for a large company. Often, you’ll have either a boss or peer that you can put as your backup and they’ll cover for you. When you work for yourself, it is much harder to unplug and take uninterrupted time off.

Steady Salary to Pay Down Debt and Invest

When you work for yourself, your salary isn’t guaranteed. If you get sick and can’t work one day you won’t make money that day. If you get sick at a corporate job you’re much more likely to be able to take a sick day or PTO.

Because you know your salary when you work for a large company, you are able to budget and start forming an emergency fund. Within your budget, you can set aside money every month to put towards tackling any debt and money to invest.

Advantages Of Working For A Large Company As A Young Professional Summary

Advantages of working for a large company as a recent graduate include career advancement, networking opportunities, development opportunities, corporate benefits and more. Even though the upside income potential working for yourself is far greater, it’s hard to start your own business right out of the gate. Many either do not have the business acumen or risk tolerance to start working for themselves immediately.

Working for large corporations isn’t for everyone. It is very structured and you are one of thousands of people but there are plenty of opportunities for advancement. When you work for yourself, you may have unlimited income potential depending on the industry, but it’s also riskier. Regardless of which path you choose initially, you can always change your mind later.

What advantages did you see working for a large company as a young professional?

9 Essential Working From Home Tips

02.10.2020 by admin // 8 Comments

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Did you start working remotely for the first time this past year? Working from home is different than working from the office, so how do you adjust your schedule and your style? You have the verbal support from your employer, but have they equipped you to be successful? Employees and employers must adjust the use of technology, process and culture to enable remote teams to be successful. You need to learn how to communicate with your manager and team virtually, set boundaries at home and ensure your company offers the right tools to be successful working remotely. I’ve worked remotely for the past 5 years and worked from home for the past 3 years. Here are my tips for working from home.

Working Remotely From Home Workplace Setup

One working from home tip is to have a good workplace setup. Since you’ll be working and living in the same place you need to set boundaries. If you work from wherever in your house it’s harder to set these boundaries. Having a dedicated place where you’ll work from home everyday will help set these boundaries.

Have a Designated Working From Home Area

By having a designated area to work from home, you’ll help establish boundaries between work and home. This will help in a few ways. A set place to work from home will keep all of your work materials in one place. Mentally, you’ll also feel like you’re at work as you’ve physically moved from the places you relax in your house to a place where you do work.

It’s also very easy to not stop working when you’re working remotely from home. Previously, when you had to commute back home you could see the office emptying out and knew when to drive home to avoid traffic. When you work from home though the same end to the day doesn’t exist. Especially if you work in a global company you’ll receive emails around the clock. Having a designated working from home area will help end the day. Once you leave that area, you can feel like you’ve left work.

Buy Materials and Equipment You Need to Be Successful

At your former office, what did you have available to be more successful? You’ll want to have the same things in your at home office when you’re working remotely. If you had a dual monitor, get a dual monitor setup at home. Same with a printer, any organizers and office supplies.

To be successful remotely, there may be additional equipment you need to invest in. For example, your meetings with coworkers will now be on the phone or video. Do you have internet speed that supports that? What about a video camera and headset?

If you work for a large company, ask if they will cover part of the cost of setting up your new workspace. Don’t forget, it’s saving them money too by not paying for your cubicle / office and the utilities associated with that office space.

Invest in a Comfortable Chair

It’s easy to stay in one spot all day so make sure you get a comfortable chair. An ergonomic chair will be optimized for both comfort and work. A good ergonomic chair may cost up to $1,500 new but remember you’ll be sitting in this chair every working day. If you want to save money once you find a chair you like look on Craigslist, Offer Up, LetGo and other second hand sites to find that same chair used.

How to Work Remotely From Home And Not Go Stir Crazy

Skipping the commute to work is great until you realize you can literally be stuck at home until you need to run an errand or see a friend. It is possible to not leave your house for days. Make sure you get yourself out of the house. Sometimes this is going to get a coffee even when you can make it at home. You can also decide to work from a coffee shop or other location for a few hours or few days a week.

If you prefer to work from home the entire time, look to get out of the house before or after you start work. This could include joining a gym nearby, or having hobbies that are outside the house. It’s important when you work from home to find a community where you can interact with other people outside of the house.

While you’re at home working, force yourself to get up and move around. It’s easy to start working at 8AM and before you know it it’s 5PM. Setting reminders in your calendar to get up and move around or blocking time in your calendar for a walk will help you get up and move.

How to Work From Home And Not Get Lonely

It’s nice not to have to commute but you also don’t get to run into coworkers and have passing conversations when you are working remotely. When you start working remote, it’s important to find other ways to interact with people face to face.

It’s easy to get lonely when you’re not running into co-workers in the office. Sometimes the uninterrupted time is nice as you’re able to get more work done. Other times it just feels lonely. In normal times, there are plenty of ways to overcome this. Don’t assume seeing no one for days on end is normal for when you’re working from home.

The first option is to find other people to socialize with face to face. Can you meet people for lunch? Do you have customers or other coworkers in the area? Plan a coffee break. Join a gym nearby and go to the gym every day before or after work or during a lunch break.

The second option is to establish strong connections with other remote coworkers virtually. Are you on a conference call and can hear there is a side conversation in the room you can hardly hear? You can have side conversations remotely as well through Slack, text or another instant messaging tool with other remote coworkers. Get to learn about your coworkers virtually and identify what you have in common. Easy connections include if they’ve ever lived where you do now or vice versa, same college, kids that are similar ages or interest in the same professional sports.

Plan What Your Day Looks Like

When you start working remotely your schedule will change. Understand how much time you’re saving with not commuting. If you used to commute 1.5 hours a day you don’t have to spend that entire time working extra hours.

Then, make a plan for how you will use that extra time. Do you now have time for those workouts you never had time for before? Can you finally get the recommended 7-8 hours of sleep? Spend more time with family? Spend those hours working? Go to the gym? Be intentional as to how you spend this “extra” time you just got back.

Last, set a time for when your workday ends. It’s very easy to not stop working when you’re already all set up. Even if you have to log back into work later at night this will help you get a break to be with family, eat dinner or have some time to yourself.

Team Dynamics When You Work Remotely

The dynamics you have with your team will likely change when you are working remotely. How different the dynamics are depend on your team. Are you the only person on the team who is remote? Is everyone on your team working remotely? Where is the rest of the team located?

The dynamics are very different if everyone is spread out verse if everyone is in one location. If you’re the only person working remotely you’ll be on the phone while everyone else is in a conference room together for meetings. Your coworkers will run into each other in the hallway and walk over to where your manager sits when they have a question. In group meetings they can mute the phone while there are side bar conversations, there can be multiple conversations going on at once and it’s so hard to hear you can’t participate in any of them. Having a career sponsor in these situations is important as they’ll help recommend you get put on key projects and be an advocate about your skill set.

If the entire team is spread out either all working remotely or all working in different locations the dynamics are different. When everyone is in different places, everyone will join a meeting on the phone and participate virtually. There are no situations where there are side conversations in the room you can’t quite hear.

Understand The Support Your Company Gives Remote Employees

Beyond the verbal support that you can work remotely, how will your company support you? What technology do they have to support a remote workplace? How easily can you log into the company network through the VPN? If you have a challenge with your company equipment like your laptop, how do you get support for it?

Getting the verbal OK to work remotely is only one part of the support. Ensure that you have the capabilities remotely to be able to access the company intranet, equipment required to do your job and more.

Even more importantly is communication between your team and the communication tools offered by your company. Slack, Zoom, WebEx, Skype and Microsoft teams are several enterprise communication tools that make working in a remote team easier. Struggling with working from home? Reach out to your mentor at work for advice.

Communicate Often and Through Multiple Channels

Sometimes it may feel like when you work remotely you’re out of sight and out of mind. That’s why communication is extra important when you work remotely. Be clear with your manager on progress made on your projects, when you’ll have a draft or final project ready, when you have spare cycles and when you have too much work to be successful.

When you’re working remotely how you communicate and how often you communicate is very important. Make sure to let your manager know weekly or bi-weekly what you’re working on during your 1×1. Give a high level overview of your projects, and then 1-2 areas where you need help or where there is potential risk. If you have free time offer to get involved in another project.

Don’t forget there are many ways to communicate. You can text, call, ping through Slack or Skype, email. Know when to use each communication tool. If it’s not urgent, or something needs to be sent to multiple people use email. If you need to talk to someone quickly, text them or IM them.

Is Working Remotely From Home Right for You?

If you’re bored in the office, you will also be bored working from home. Working from home isn’t for everyone. But, keep in mind there is working remotely from home and during a pandemic working remotely from home. A typical working remotely from home situation doesn’t include daycares and schools closed, gyms closed, restaurants closed etc. Usually, you can go on a walk, or leave to grab a coffee to help break up the day.

There are distractions both at home and in the office. If you are easily distracted in the office (water cooler, etc) there will be different ways for you to get distracted while at home (TV, laundry, etc). Sometimes it does require more discipline. For example, if you don’t have a deadline given to you, you should set your own deadline and communicate that deadline to your manager.If you’re excited about your job and/ or have a lot of work to do these are easy to overcome.

If you love connecting with people face to face it may be an adjustment to communicate with coworkers virtually. Working remotely isn’t for everyone, but sometimes being successful working remotely requires tweaks to your workplace setup, setting boundaries, how you communicate and what you communicate.

Here is the full list of pros and cons of work from home.