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Amazon staff might get paid 50% less because shares have fallen so much

(fortune.com)
66 points colanderman | 3 comments | 21 Feb 23 23:29 UTC | HN request time: 0s | source
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WalterBright ◴[22 Feb 23 00:51 UTC] No.34889995[source]▶
In the various companies I worked for, my stock options were always underwater, if I recall correctly.

That's the risk with stock options.

I also know several Amazon millionaires who got that way via stock options.

That's the reward with stock options.

Remember when Boeing stock tanked after the 737MAX crisis? The employees complained that Boeing management still got their performance bonuses - because the shareholders demanded that those bonuses be based on multi-year returns, not just short-term previous quarter results. The employees complained that their quarterly bonus disappeared - because the union demanded it be based on the previous quarterly results.

1. be careful what you ask for

2. accept with grace when you get what you asked for

replies(3): >>34890059 #>>34890119 #>>34891328 #
anonuser123456 ◴[22 Feb 23 00:59 UTC] No.34890059[source]▶
Most FAANG comp is RSU, not options.
replies(1): >>34890256 #
adam_arthur ◴[22 Feb 23 01:23 UTC] No.34890256[source]▶
The distinction is not meaningful in this context. Both are deferred compensation that's subject to gaining/losing value along with the underlying company valuation
replies(2): >>34890501 #>>34891428 #
rippercushions ◴[22 Feb 23 01:52 UTC] No.34890501[source]▶
No, options are more of a gamble. Stock values move up and down, but an RSU worth something today will likely be worth something tomorrow: even much-pilloried Meta stock is down "only" 50% from peak at this point. An underwater option, though, is completely worthless.
replies(1): >>34890650 #
1. adam_arthur ◴[22 Feb 23 02:11 UTC] No.34890650[source]▶
You could easily grant employees "in the money" options that have a lower risk profile, and similar characteristics as RSU. This is effectively what an RSU is anyway, an option with a strike price of 0 that vests+exercises at some point in the future. Not to mention most startup options are granted at 409A valuation, which in most cases is below actual market value.

No meaningful difference between the two for the context being discussed above. Different tax treatment. Believe whatever you want though

replies(2): >>34892406 #>>34920985 #
2. singron ◴[22 Feb 23 06:37 UTC] No.34892406[source]▶
It's difficult to grant privately held equity that's taxable when it vests since you can't sell it to cover the taxes. Also if the company doesn't go anywhere, you paid a lot of taxes for nothing, and it can be difficult to even claim a loss if the company still limps along.
3. hamster77 ◴[24 Feb 23 05:00 UTC] No.34920985[source]▶
You cannot legally grant stock options in the US with an exercise price below the 409A price (private company) or grant date price (public company)