For the entry-level worker, employee stock options may seem completely foreign. But for most tech workers, this is commonplace and can be highly lucrative if understood correctly. In short, employee stock options, employee stock purchase plans (ESPPs), and restricted stock units (RSUs) all give an employee far more upside (and downside) than a traditional salary. As a result, you’re trading steady take-home pay for the potential to own company stock shares that could be valued at even more when you decide to sell. But is this gamble ever worth it?
JT , long-time tech worker, has spent most of his life tinkering away as an engineer at some of the biggest companies in computing. He’s no stranger to the world of stock-based compensation and knows it can be worth the lack of salary if done correctly. In this episode, JT gives a complete overview of what stock-based compensation means, the three different types of stock you’ll be offered, and how this type of payout compares to a regular salary.
He also goes in-depth on timing the sale of your stocks, the tax traps that could cost you thousands, and how to create a plan that lets you profit when getting paid in shares. If you ever foresee yourself working at a startup, tech company, or publicly-traded conglomerate, you MUST know what these types of compensation mean. Or, you’ll risk losing the real reward of a stock-based salary.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.