From my understanding part of my associate bonus could be in stocks? Will they be taxed less? If so, why do some people think getting stock bonus is worst than get cash bonus?
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My AS1 bonus was in stock. The problem was that it came with a vesting schedule so it didn't get fully paid out until the end of A2. If you quit before then, you lost the unvested portion. The value also fluctuated with the stock price. But the biggest complaint at the time was that most of us were still early in our careers, just finished grad school, and didn't have a ton of savings (many actually had debt from college / bschool) so we all preferred to get paid in cash. It was truly dumb.
Yes. Stock normally has a vesting period. If that period is longer than a year then it will be taxed as long term capital gains instead of ordinary income. The reasons people hate stock are 1. Bank stocks have underperformed over the past decade so nobody has wanted that much of their net worth invested there. 2. PTSD from the financial crisis. Many bankers had millions in deferred comp that they watched disappear (Citi was $550 in 2006 and is $48 today). 3. Optionality. If you leave banking after a few years you’ll end up leaving invested comp on the table.
I’m not sure this is accurate. Even if vesting is longer than a year it’s income tax. But the gain portion of the stock is cap gains. Think there’s nuances for rsus vs stock but you pay income tax no matter what it’s just timing
now profits interests is a diff story. But that’s for private companies
What’s the typical vesting period? And, is the stock comp going to be taxed as normal income tax or capital gain tax when you actually sell?
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