Company's stock compensation packages are often not viewed like compensation in actual dollars.
These packages can really distort reported earnings for smaller, less-profitable companies.
“There’s nothing inherently wrong with share-based compensation.
It’s prevalent in Silicon Valley and biotech because of startup culture.
With limited cash, a company operating out of a garage needs to dangle
the possibility of a bonanza to attract top talent.”
“Companies profitable enough to do billions in buybacks can also afford to pay executives
in a more transparent way. And if they aren’t actually bringing in enough money then maybe
their investors shouldn’t be so generous with theirs.”
https://marketsam.cmail20.com/t/d-e-gjthhuy-duklntldl-r/
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He always advised to hold <10% of your portfolio in the company you work for but even better is to sell the moment they vest (you pay taxes regardless) and put it into your normal portfolio allocation.
It’s prevalent in Silicon Valley and biotech because of startup culture.
With limited cash, a company operating out of a garage needs to dangle
the possibility of a bonanza to attract top talent.”
Disregarding the "top talent" ego stroking, there's a fair amount of truth in that, at least for pre- and early post-IPO companies. Options are handed out like candy, at all levels. When I interviewed with one company, I was asked whether I would prefer salary $X with N options, or a lower salary and many more options.
After having received what turned out to be worthless or near worthless options from a few startups before that I had learned enough to give the following response:
I know that you're looking for me to take the larger option package. Ultimately though, options are like lottery tickets. If they pay off, I'll come out well enough with the smaller package. It's not that I don't have faith in the company - if I didn't I wouldn't be talking with you. It's that salary history is a concrete metric that I can leverage if things don't work out and I have to move on. Option grants are nebulous.
He always advised to hold <10% of your portfolio in the company you work for but even better is to sell the moment they vest (you pay taxes regardless)
That 10% figure is recommended because you don't want to hitch both your income stream (job) and much of your portfolio to the same horse in case the company goes south. I consistently suggested being cautious to others and I was consistently ignored.
"sell the moment they vest (you pay taxes regardless)" sounds like he is thinking about nonqualified stock options (NSOs) that have been exercised without making an 83b election. (Perhaps a cashless exercise?) Those get taxed as they vest. Vesting date doesn't matter for taxation of incentive stock options (ISOs) or if you've made an 83b election (that's a purpose of the election). Regardless, unless you exercise, you don't pay taxes.
https://carta.com/learn/equity/stock-options/taxes/
https://dpalawyers.com/stock-options-the-major-differences-between-isos-and-nsos-the-83b-election/
At least that's what I vaguely recall. It's been several years since I had ISOs or made an 83b election on NQOs. (I was but a cog in various machines; options were handed out liberally. And they were lottery tickets that one typically wound up discarding.)
having friends&family at AMD that remember rougher times, they pretty much all take out at least $50k/yr in options ASAP and then may ponder further strategies around tax for remaining amounts above that.