Why Big Tech Compensation Is So High - RSUs

This video explains how Restricted Stock Units (RSUs) work as a major part of tech compensation, especially in large tech companies. It outlines key timing mechanisms, industry trends, and the outsized impact RSUs can have on total earnings.

• RSUs are company shares granted over time, typically as part of a four-year compensation package. For example, an employee may be awarded 4,000 shares and receive 1,000 per year.
• Most companies enforce a one-year cliff, meaning no shares are received until completing the first full year. However, some companies like Google and Facebook have moved toward shorter cliffs, such as three months.
• After the cliff, vesting usually occurs quarterly or monthly, gradually releasing shares to the employee. This incentivizes ongoing retention.
• Graphics help illustrate vesting schedules, showing an initial cliff followed by incremental monthly or quarterly share distributions over the remaining years.
• RSUs can far exceed base salary in total value, especially at the senior level. In some cases, RSUs make up 75% or more of an individual's total compensation in big tech.