Case Study: It's Double-Edged Sword (Pinterest)

This segment explains the volatile nature of equity compensation through the real-life example of Pinterest. It demonstrates how RSUs (Restricted Stock Units) can dramatically boost or reduce total compensation based on stock market performance, and highlights the importance of timing, risk awareness, and planning when joining a company.

• Pinterest’s RSU Grant Example: An employee joining Pinterest in January 2020 with a 20,000 RSU grant at a $20 stock price would have received a $400K equity package. As the stock price rose to $80 in a year, the total value of those RSUs skyrocketed to $1.6M.
• Golden Handcuffs Phenomenon: When stock prices soar, employees become financially incentivized to stay—even if they’re unhappy—due to the high value of unvested RSUs, often referred to as "golden handcuffs."
• Stock Price Timing Matters: The RSU grant is priced just before the start date. If the stock price dips right before joining and then recovers, the employee benefits from an immediate bump in total compensation.
• Market Downturn Impact: As Pinterest’s stock fell ~70% from its peak in 2021, employees who joined during or after the peak saw a significant drop in total compensation—sometimes down to one-third of their original grant value.
• RSU Lockout Periods: Employees at public companies can't sell RSUs at will. Sale windows are restricted to prevent insider trading, which can prevent selling even when the stock is at a peak.

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