If you're in tech and a recruiter just handed you a better offer, there's a number standing in the way of an easy yes, whatever's still unvested in your current RSU grant. It's easy to treat that number as a straight loss and let it decide the whole conversation for you.
Amy Walls walks through how to put a number on what you'd leave behind, when an upcoming vest date should change your start date, and what to ask the new company to cover, from the sign-on to the new equity grant. She also runs the math on a hypothetical engineer's offer side by side with what he's leaving, and talks about where concentration risk and career trajectory fit in.
You'll learn:
● How to put a number on unvested RSUs instead of treating them as a flat loss
● Why your next vest date, not just your start date, should drive your negotiating timeline
● How a sign-on bonus and a new equity grant typically work together to offset unvested equity
● Why concentration in your current company's stock can make leaving the safer move, even when the dollar comparison looks close
(00:00) Intro
(00:54) What unvested stock is worth today
(03:00) How your next vest date changes the decision
(06:18) Negotiating a gap in equity compensation
(10:10) A two-year job offer comparison
(14:31) Career growth, stock concentration, and burnout
(17:10) A step-by-step way to decide
(19:08) Contact Thimbleberry Financial
ThimbleberryU 169 - Should I Leave Unvested RSUs For A New Job
Speakers: Jon Gay & Amy Walls
[Intro Playing]
Jon Gay (00:07):
Welcome back to ThimbleberryU. I am Jon Jag Gay, joined by Amy Walls from Thimbleberry Financial. Hello, Amy.
Amy Walls (00:12):
Hi, Jag. It's good to talk to you.
Jon Gay (00:14):
Always a pleasure to be with you too. We're talking about RSUs today. If you're in tech and a recruiter just put a better offer in front of you, there's usually a number standing between you and saying “yes,” and that is whatever's still unvested in your current grant. Should I leave unvested RSUs for a new job? It's the question stalls a lot of good moves because on paper, it looks like you're being asked to walk away from real money.
Amy's here to break down what that number actually means, and how to weigh it against everything the new offer brings. So, we're going to start simple, Amy. When someone's got a great job offer on the table and real money sitting unvested at their current company, what should they be thinking about first from 30,000 feet?
Amy Walls (00:54):
Well, first of all, unvested RSUs aren't yours yet. So, when you leave, they're simply forfeited. No negotiation, no partial credit. And while that sounds brutal, it isn't a verdict on whether leaving is the right call. The real question, Jag, isn't how much you're losing, it's what the new offer needs to cover to make this a washer better.
So, what you want to do is put a number, a dollar figure on what's unvested, the shares that are left to vest, valued at today's price, not your original grant price. Even though that price may change in the future. In fact, we should expect it to.
Then you're going to need to put a number on the new offer, the salary increase if there is one, any sign-on bonus, and what your new equity grant is going to be worth on its own vesting schedule. If the new offer's extra value covers the gap in the first couple of years in the new job, that math may be much closer than it feels like if you just say, "Oh, the value of my unvested RSUs."
And if it's not going to cover that, that's also really useful information, but not necessarily a reason to say no to the new job. It just means you're paying for something else, whether that's the new role and the experience, the growth that comes with it, or maybe getting out of a bad situation.
Maybe it's that you see more upside potential in the new company. So, really, Jag, going back to your question and taking it a step further, the question behind the question, the mistake would be treating that unvested number as a loss instead of as one line item and really a bigger comparison.
Jon Gay (02:47):
That makes a lot of sense. Next question, Amy, and you maybe if you're listening, anticipating this — how much does the timing change all this? If someone is close to that vest date and that money is closer to real, does that change the calculus here?
Amy Walls (03:00):
I love how you included that it was real. It means my first answer made sense. Timing can really be the cheapest lever you have in this. And so, it is a really important one to consider pulling. RSU plans vest on a schedule. That might be a cliff, it might not be. And the first question you want to look at to answer this timing question is when is my next vest date?
Jon Gay (03:28):
And quickly when you say cliff, you mean all at once?
Amy Walls (03:31):
Yeah. And so, if you are a few weeks out from a vest date, that's often worth waiting for. It's real, already earned value. I mean, it's not yours yet, but if in just a few weeks that's going to vest and that's a significant amount of money, can you hang out? Can you make it work?
Now, let's say you are inside the first vest and you don't have a vesting date till one year out. Now, really the comparison, and I'll call it the math — it's not pure math, but it changes completely. Nothing's vested, there's such a long timeframe until something is going to vest that there's really nothing on the table to wait for.
And here's the other piece. Recruiters and new employers, especially those in tech, understand this. They anticipate that being common for the people they're working with. So, if you're in the first category where you've got this vest date coming up, and it's significant money, a start date that's moving by two to four weeks to clear a vest, that's a pretty standard ask.
Jon Gay (04:51):
Okay, that makes sense.
Amy Walls (04:52):
What's not normal, where you're going to get some pushback, is stretching that request past what obviously the new opportunity can tolerate.
Jon Gay (05:01):
Sure.
Amy Walls (05:02):
And so, there's a point at which that delay would cost you that offer. But the closer you are to that vest date, the trade-off shrinks. And so, what I'd say for any listeners that are in this situation right now, before you call the recruiter back, know your vest date (chuckles).
Jon Gay (05:23):
Yes. You want to go in armed with as much information as possible. And that makes sense because these recruiters, if they're in the same field, tech, they're familiar with RSUs, they understand that it's a reasonable, let’s say, "Hey, I'm a month out or two or three weeks out maybe from my vest date, that's a major financial swing for me. So, can we hold off two or three weeks?" I think that makes a lot of sense.
Amy Walls (05:46):
I mean, we're all humans, and so there is understanding, and if it is short term, two months might not be short term — but if you're reasonably saying this is short term and the new employer is saying no, that also probably is going to tell you something.
Jon Gay (06:07):
Absolutely. Alright. So, with that in mind, say someone does the math and there is a real gap there, how do they go to get that covered in the new offer from the new potential employer?
Amy Walls (06:18):
Well, first of all, you don't want to undersell yourself, and people often do. So, how you would undersell yourself is treating that unvested equity as a loss instead of the number to negotiate around.
So, to just look at it and go, "Well, that's lost, I don't do anything with this. I'm not going to consider it." That's selling yourself short. So, you want to know how much unvested equity you have. You want to know the number, the dollar figure.
But where you have to draw a line is between short term and longer term because even though it's not yours yet, there is value in that, and it's understanding that you're leaving that unvested amount behind.
It's not that you're giving up equity, it's that you're leaving it behind. And to know that the opportunity of the new job makes sense financially, and obviously, I'm only talking financially here, what might the new job need to bring to make it worthwhile to leave that unvested amount behind.
So, sign on bonuses exist, and they can help fill that gap. Many companies have a standard playbook for covering unvested equity. They're just not going to offer unless you ask.
Jon Gay (07:46):
Never know unless you ask.
Amy Walls (07:48):
Exactly. You may be getting a new equity grant. That's very common in tech, and that's often a very big piece of the puzzle. And so, if you've given an explanation, you've figured out salary, this is part of that whole compensation negotiation conversation to say, "Well, to make this move, I'm going to be giving up, or I'm going to be leaving behind (better terms) this much in RSU income as of right now."
So, that gap to me is pretty big. Is there a way that we can help fill that, whether it's a larger equity grant or a sign-on bonus that will help fill that gap to make this leap make sense financially?
Jon Gay (08:45):
Sure.
Amy Walls (08:46):
And that's more of the conversation you want to have. You also, in having that conversation, will want to know how the new grants vest. Because if they're cliff vesting or they're quarterly, it makes a difference. And if the possible new employer, we should say, given what we're talking about, can't move on in more cash or more equity in the form of other RSUs, maybe it is base salary that could adjust.
Jon Gay (09:21):
Sure.
Amy Walls (09:21):
And that's also a pretty good opportunity, if that's what they want to look at considering most of the time, there are going to be raises on that that will compound year after year. But the bottom line here, Jag, is what I started out with. None of this will work if you don't ask. And recruiters do expect the conversation, and having the conversation isn't confrontational. It's really part of an expected negotiation.
Jon Gay (09:53):
That's a really important piece because I think of myself, I'm pretty non-confrontational. I'm a people pleaser; I'm a terrible negotiator. So, I think that's really important to think about. And talking about people underselling themselves in these types of conversations, can you give us a hypothetical of what that might look like?
Amy Walls (10:10):
Yeah, Jag, let's make this concrete. Let's say there's a senior software engineer, let's call him Jim. In his current job, his base salary is $320,000, and he's two years into a four-year grant. The company's done well and what's unvested is worth about $500,000 in today's price.
So, Jim could do what I suggested not to do, and that's his first instinct. And it's to see when he gets the offer that this $500,000 of equity compensation that is yet to vest is just lost, and he anchors his entire decision to that. But here's the information on his new offer.
He gets $150,000 sign-on bonus. He's going to get a $40,000 bump in base pay and salary, so he's now up to 360 (thousand), and he's getting a new equity grant worth about $500,000 over four years, and it has a one-year cliff, so he's not getting any money for at least a year.
So, year one in the new job between the sign-on bonus, the base salary, and what will vest right at the end of that year, his income is $635,000. At his current employer, he has his base salary of $320,000 and he has existing grant or grants equal to $250,000, so $570,000. So, he is ahead in year one taking the new job.
Jon Gay (11:47):
Wow, okay.
Amy Walls (11:48):
Year two, he gets a raise, right? He probably would get a raise in either job. But he gets a raise, he's now getting quarterly grants, which are going to total about $165,000, and that's against what he left behind. So, let me break this down a little bit differently in year two.
Year two, let's take out the raise actually. In year two, he's going to get another $570,000 at his current role, because he's got his base salary plus inflation, likely, and he's got the $250,000 vesting. At the new job, his base salary is $360, and over the course of the year, his vesting will be $125,000 for a total of $485,000.
So, if he stays, his total compensation in those first two years is $1,140,000. In his new job, it's $1,120,000.
Jon Gay (12:56):
$20,000 less in the new job.
Amy Walls (12:58):
$20,000 less, yes. But if we go back to what I said Jim would originally have anchored on, it was losing $500,000.
Jon Gay (13:09):
Right.
Amy Walls (13:10):
When in reality, $20,000 in the scheme of what we're talking about is pretty small potatoes. I'm not saying it doesn't matter, but it's small potatoes in the decision-making, especially when there's more opportunity for growth, whether that is in the company, whether that's in your own career, or it's just a better environment.
Jon Gay (13:35):
Then that might mean that $20,000 hit in the first two years, if it's a better situation overall, maybe that's worth it.
Amy Walls (13:42):
Absolutely. And so, yeah, what I wanted to make the point on, and I'm not sure I did, but is that he originally was looking at this as, "I'm going to lose $500,000 to make this change," and that makes you resistant to what the opportunity is. In reality, when he gets this offer and we'd run the math, we see he won't come out whole in the first two years, but he's only off by $20,000.
Jon Gay (14:14):
Which is, depending on how you do the math, about 2% of his total compensation. I just opened my calculator in case you're curious.
Amy Walls (14:21):
Yeah, that 2% very well could be worth the move.
Jon Gay (14:24):
So, this kind of leads into the next question, Amy, beyond this, just the pure math of it, what else goes into a decision like this?
Amy Walls (14:31):
Yeah, as we've made the point, the dollar comparison matters, but you're right, it's not the whole decision and treating it as such has its own risk. So, there's concentration risk. We've talked about this in prior episodes. When you work for a company and you have lots of stock in that company, vested for sure, but also some unvested equity, that increases risk.
And maybe you have enough, maybe whatever your strategies were that made sense for you or that just happened by accident, leaving might actually be one of the best ways to lower that risk and start that process over in combination with other things, the growth trajectory.
So, if this is a new position that's going to build new skills and allow you to get to the next place in your career, that could be valuable. Growth within the company and opportunity that you feel is there also could matter.
Now, we have to take into account our own biases. Maybe you're “over it” at your existing firm; you're just over it. You no longer believe in them. Well, that could be a bias because that alone doesn't necessarily mean they're not poised for good growth.
So, really the role and the scope of the role, they count for something real. Other things that we need to consider, and this might go with really being over your existing job, is that burnout and fit really are legitimate inputs.
Jon Gay (16:07):
In this equation, yeah.
Amy Walls (16:08):
In decision-making, absolutely. They're not excuses, but they're legitimate inputs. And a number could look worse on paper, but still be the right move. And the reverse is also true. And don't we all wish that we could look at things with hindsight and know which was better?
We can't, but we need to look at it fairly without having the grass is greener lenses on, or rose-colored glasses or whichever, one of the many analogies out there we could use. And I kind of look at it as let's put all of those things into a pot, and then let's start pulling them out one by one and organize them as they're connected.
Jon Gay (16:55):
Okay, there you go.
Amy Walls (16:58):
That was a lot of analogies.
Jon Gay (17:00):
It was. So, let's kind of zoom back out. We got into some numbers; you got into some analogies. Let's do the quick version before we wrap up. How do you work through this?
Amy Walls (17:10):
Start with a number. What's actually unvested, valued today, and when does your next vest happen? Knowing and really thinking about when that vest happens compared to the calendar, and if it's worth asking to postpone accepting the new position for that.
Do the real math, right? Don't just assume I'm leaving behind this much in equity, it's a loss, but add up what the new offer is going to cover over a couple of years compared to what your current position will give you, and compare those.
Layer in the other risks, all the things we threw into the pot: your concentration risk, your career trajectory. And then as you lay that out, if the gap is small or covered, the equity question, which was really what we were here to talk about, mostly resolves itself.
Jon Gay (18:13):
Good point.
Amy Walls (18:14):
If the gap is real and big and it causes you to pause, decide if consciously, intentionally, you're choosing to pay for something else, like more growth opportunities, a better role, getting out of a bad situation. Either way, it's really important to work through and not just use that gut reaction of, "Oh no, I'm going to leave this all behind if I do this, and therefore, there's no way it makes sense."
Jon Gay (18:43):
Alright. I mean, that's pretty a good place to leave it. I think unvested equity feels like the whole decision, but it's really just one number, one data point in a bigger comparison with the new offer covers, how close you are to your next vest, like you were saying, and what the move actually does for where you're headed.
If you wanted to know what your numbers are or maybe need a little help doing this calculation before that call with the recruiter, how do listeners reach you and your team at Thimbleberry Financial, Amy?
Amy Walls (19:08):
Yeah, they can find us online at thimbleberryfinancial.com, or by giving us a call at 503-610-6510.
Jon Gay (19:16):
As if you haven't heard before in previous episodes, or maybe this is the first episode you're consuming, this is an area that Amy has a lot of experience in. We'll talk again in a couple weeks.
Amy Walls (19:25):
Sounds good, Jag.
[Outro Playing]
Voiceover (19:26):
Securities offered through registered representatives of Cambridge Investment Research, Inc, a broker dealer, member of FINRA/SIPC. Advisory services through Cambridge Investment Research Advisors, Inc, a registered investment advisor. Cambridge and Thimbleberry Financial are not affiliated.
Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions.
Securities offered through registered representatives of Cambridge Investment Research, Inc, a broker dealer, member of FINRA/SIPC. Advisory services through Cambridge Investment Research Advisors, Inc, a registered investment advisor. Cambridge and Thimbleberry Financial are not affiliated.