Can someone explain RSUs and vesting to a noob like me? Got an offer from FAANG which vests 25% every year. Does it mean every 3 months I get 6.25% of the stocks?

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Depends on the company and terms of contract.

Start simple: you get 100k grant that vests 25% every year based on stock price right around the time you join. Let’s say stock price is $100 at start date, you have 1,000 shares that will vest over time.

After 12 months, you will have 250 shares that vest. If stock price is now $150, you earn $37,500. That’s not cash by default - you can choose to keep/sell the shares, which is when it’ll actually become cash - vesting just gives you the ABILITY to decide.

On top of all this, Companies will often give “refreshers” based on performance, or raises. You’ll also hear about “topping off” which companies will sometimes do if stock price drops, so additional shares are granted so that your TC isn’t screwed.

I hope this helps!

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Thank you Amazon1! This is super helpful, the company is giving 6.25% in the first year- but the vesting dates seem far away from when I join- so looks like my first vesting date is almost 6 months after joining- been a consultant all my life so want to make sure there’s nothing I’m misunderstanding.

Varies by company, but the most common vesting schedule involves a delayed vesting for the first year. At the end of year 1 you get 25% all at once, then after that you get 6.25% per quarter.

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Basically yes. Usual vesting period is:
- nothing for the first year, but get 25% at once after 1 year
- from there, get 6.25 as you mentioned each quarter
- if you get a raise in the next 4 years those new stocks actually add up
- you don't have to wait 1 year for those new stocks to start vesting as well

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I found this podcast episode helpful too. They talk about it in the 2nd half:
https://open.spotify.com/episode/5ovugWC0drT9E8jXsu64P9?si=C1OYR4RnQl-8YTeCfA2Eug&utm_source=copy-link

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Thank you C1, will listen to this- fishbowl should also have a session on this for consultants like us 😂😂

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