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That's not exactly how it works. They give you a total comp number, and then you choose the cash/equity ratio yourself, which you can change each year. A lot of people chose the all cash option because they didn't understand there equity option, so they changed it to give everyone a little bit of equity regardless, but you can still opt to get extra equity in lieu of cash, and change that election every year.

I think it is an amazing plan. I was able to choose more equity because I had a working wife and no kids. Others chose more cash. One guy chose 100% equity, and is now retired.




> One guy chose 100% equity, and is now retired.

being able to choose 100% equity would suggest a particular level of financial independence before even starting. how long did they work without a salary? did they regularly sell equity as a salary-replacement?


Or perhaps a working partner and a willingness to get by on one income. Know a couple who did this in NYC for a couple of years on non-dev salaries and the trade-off definitely opened doors for them.


How is this any different from taking your entire paycheck and dumping it into a single stock each month? It's effectively a gamble, and often employees are too emotionally invested to make a rational financial investment of that scale.


It was a gamble, but we had a lot of leverage because we got major discounts with pre-tax money.


He lived off selling his Google stock, where he worked before Netflix. :)


Netflix stocks are totally insane, as you're not really getting stock but instead a complex leveraged financial instrument in the form of an call option, that you have to pay for based on a Netflix estimate of the option premium.


Yep that’s why they switched it to giving everyone some equity. But those of us who understood the financial instrument being offered dis really well for ourselves.


Don't you pay tax when you actually get the equity? How is it different to getting cash and then just buying the stock?


It's different in that at Netflix the equity comes in the form of non-transferrable 10-year options which do not trade on any market. Furthermore, the option premium is estimated by Netflix at fixed at a constant value, rather than being set by a market.

If it was straight stock, then yes it would be rather equivalent to getting cash and then buying stock right away.


> If it was straight stock, then yes it would be rather equivalent to getting cash and then buying stock right away.

I guess this is purely academic for Netflix, but one difference in other companies is that the grant is made ahead of time, and the stock price can rise or fall before it vests.

If (say) you expect the stock to rise with the market, and you expect the market to rise at 7% a year, you might also expect your income from vesting stock to also rise at 7% per year over the vesting period (typically four years) regardless of any raises or promotions.

I have heard of some companies adjusting subsequent grants based on changes in value of invested stock, though. I think policies there vary.




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