Equity and RSUs in US Tech Offers: What the Numbers Actually Mean

Base salary is the only number you can trust on day one

US tech offers often list three numbers: base salary, an annual bonus target, and a stock grant. Only one of them is guaranteed cash. The stock figure is quoted at a value that assumes today's share price and a vesting schedule that runs for years, which means the headline grant and the money you actually receive can be very different figures.

That does not make equity worthless. It makes it worth reading carefully.

RSUs versus options

RSUs (restricted stock units) are a promise to give you actual shares once they vest. At a public company, the value is straightforward: if the share price is $180 and 500 units vest, you receive roughly $90,000 worth of shares before tax. Employers usually withhold taxes by selling some shares automatically, so your take-home is smaller than the headline.

Stock options give you the right to buy shares at a fixed price set when the grant was made, called the strike price. They only have value if the share price rises above that strike. At public companies, options are more common in senior roles. At startups, they are the norm, and the strike price is usually set at whatever valuation the company last raised at.

Vesting schedules and the cliff

The standard US tech vesting schedule is four years with a one-year cliff. Translate that: nothing vests in your first twelve months, and if you leave at month eleven, you walk away with zero stock. After the cliff, shares typically vest monthly or quarterly for the remaining three years.

Some companies use different shapes:

• Back-loaded: 5% in year one rising to 40% in year four. Common at Amazon and some large employers.
• Front-loaded: 33/33/22/12. You get more early, less later.
• Annual refresh grants: new grants each year that stack on old ones. Ask whether refreshes are standard or performance-based, because a company with no refresh policy means your total pay drops sharply in year five.

Convert the grant into a yearly number

When you compare two offers, divide the total grant by the vesting period to get the annual value, then discount it for risk. A $200,000 grant over four years is $50,000 a year on paper. At a public company with a stable share price, treat most of it as real, then adjust for the tax withholding that will come out. At a private startup, apply a heavy haircut: the shares cannot be sold until an acquisition or an IPO, which may never happen, and you may have to pay to exercise options on the way out.

Questions to ask before you sign

• "What is the vesting schedule, and is there a cliff?"
• "Is this grant in RSUs or options, and what is the strike price?"
• "How is the grant value calculated, and does it change if the share price moves?"
• "Do employees receive annual refresh grants? What percentage got one last year?"
• "What happens to unvested shares if I leave, and what is the exercise window on options?"
• "Can I see the plan documents, including any acceleration clause for acquisitions?"

Asking these questions is normal in the US and will not cost you the offer. If a recruiter cannot answer them, ask for the equity plan documents or a session with the team that administers the plan.

Taxes and timing, in plain terms

With RSUs at a public company, the shares are taxed as ordinary income when they vest, based on the value that day. Sell immediately and your tax picture is simple. Hold them and you take on the risk of a single stock, plus capital gains or losses on the difference. With options at a startup, you may owe tax at exercise on paper gains even though you cannot sell anything, which is how people end up with a tax bill and no cash. Run that scenario past a tax professional before you exercise.

Weighing equity against cash

A useful habit: negotiate base salary first, then consider equity. Base salary affects your annual raises, your future offers, and occasionally your mortgage application. Equity is a bet on a company's future that you have limited control over. If two offers are close on base but one is heavy on stock, take the one with the cash and treat the equity difference as the tiebreaker, not the reason.

And if the equity is the only thing making an offer competitive, say so. Asking for a higher base or a one-time signing bonus to offset a longer cliff is a standard, reasonable request in US tech hiring.