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As part of an offer I received, the company gives me a stock award in the following manner. The number of shares received is equal to some number $XXX (specified in my offer letter) divided by the closing stock price on a future date. This stock award vests over a period of N years. I'm trying to determine how much I should value this, and have a few questions below:

  • Is a "stock award" essentially the same as a "stock grant"?
  • I'm not sure how taxes play into this award, what should I be cognizant of/what should I ask my recruiter?
  • Suppose the award vests evenly over 4 years, with 1 year cliffs, and suppose the value of the award if $100K. Would the following calculation be correct? The total number of shares received at the Y1 cliff is equal to: $25K / [stock price at Y1]. At Y2, I would receive an additional $25K / [stock price at Y2] shares. Note, I am ignoring taxes for the moment, as well as any discount I receive when purchasing company stock.
  • In a negotiation with another company, can I count the entire $XXX stock award towards my "year one compensation", or would it be more accurate to only count $XXX/[vesting period] towards my year one comp?

Thanks for your help.

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  • Is the stock publicly traded? I assume so, as you are mentioning the closing stock price. Commented Sep 30, 2016 at 14:23
  • Yes, the stock is publicly traded Commented Sep 30, 2016 at 14:26
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    How about consider that you could choose to immediately sell the shares when you get them, so just value this as 4 $25k payments, one each year.
    – user11599
    Commented Oct 30, 2016 at 21:40

1 Answer 1

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This award is an attempt to incentivize loyalty. This indicates that they may have had problems with turnover at some point, recently or in the past.

Keep in mind that you can go too far with this type of calculation. Back of the envelope is typically enough. Consider all opportunities over the same period. Either over four years to match this award, or break the award down to an average.

Be careful not to chase a good salary, benefits package, etc. into a position you do not enjoy.

Edit: Ask an accountant. Ask a recruiter. Use the average.

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  • I understand the incentives behind offering stock, I'm looking more for direct answers to the questions I posed above. Thanks for the thoughts though. Commented Sep 30, 2016 at 13:38
  • Added an edit to cover the answers in my opinion. Accountant for the first two. Those are factual questions suited for subject matter expert familiar with tax laws where you live. For the purpose of comparing offers, compare them on the same bases. Over the same period including all forms of income.
    – Xalorous
    Commented Sep 30, 2016 at 13:43

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