What’s the deal with stock bonus?
I guess I don't understand the stock portion of big bank bonuses very well. How do senior people ever leave? If you have that much built up in stock it seems like you would have to stay, right?
Do other corporates / banks buy you out of your unvested shares if you leave for them? Seems like that is the only way to switch jobs.
Do people purposefully underperform to get laid off so they can keep their shares (if you are not fired for cause, do you keep your vesting schedule for unvested shares?)
It is more advantageous from a tax perspective, right? Since your tax basis is the value of the share when it is given to you. If you are only paying capital gains taxes for income taxes. Is that how it works?
I guess it just seems like a massive trap that would not make me want to stay somewhere.
I think you answered your question.
How about retiring though?
Yes, and this is where the term 'golden handcuffs' comes in.
Lol I know, wondering if anyone has any commentary beyond the basics.
I hear a lot of times there will be an agreement if you’re in good standing where they will let you keep a %.. not sure how much that happens in practice though.
Get paid in cash not stock
At the analyst level yes....
Isn’t getting paid in stock better because you’ll save a lot from taxes? Obviously you’re going to be golden handcuffed though
Yeah that is what I am wondering too - let's say you get $75k of stock vesting over 3 years and at the end of that 3 years the stock is flat. Do you really get to keep the whole $75K since no capital gains taxes? If you were just paid $75k cash at that time you would really only take home ~$37K - $40K. That's awesome if it really does work out that way. It would really leave you with a cushion for the stock to drop significantly and still come out with more cash. Maybe missing something though?
Also, if you are bought out of those shares from another firm, does that mean you have to pay income taxes? I guess unless you are swapping for their new shares.
These are the types of questions I am not confident on
Most firms will be willing to buy you out of anything unvested. Even if it’s a large amount the value they bring to the org will outweigh it (eventually). When their own bankers leave banks are also gaining back unvested shares from them and shuffling it around to new hires.
Everyone has covered the main points.
Yes, it is meant to help retain talent. Yes, you are still taxed. Yes, firms do buy you out of the equity when moving firms (depends on firm, how senior you are, etc). And finally, yes, it does vest over time and leaving on good terms (or retiring) generally allows you to keep a large portion (even non vested).
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