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I would value the amount that vests in the first year discounted a bit based on how long until you can sell. If they give you $25k and it vests over five years I would start at $5k. If I can't sell for 5 years I might take ~25% off compared to cash compensation.
One thing to be aware of is lost companies use these restricted shares as insurance and if you violate your non-compete they rip them back. So I would further discount based on how restrictive the non-compete is or any other agreement.
Then discount if you think that company is likely to grow or decline. Obviously not easy to know, but if it's a startup, bankruptcy is a high risk, but alot of possibilities as well. If established company likely to be close to steady.
In general, I value unvested RSUs and options at zero. You could be fired tomorrow and they're all gone.
For illiquid stock (i.e. private companies), I value even vested stock at zero for my financial planning purposes but at the 409A value for tax purposes, if relevant.
In general, I value unvested RSUs and options at zero. You could be fired tomorrow and they're all gone.
For illiquid stock (i.e. private companies), I value even vested stock at zero for my financial planning purposes but at the 409A value for tax purposes, if relevant.
I need to find some way to value them in order to consider a compensation package at a new job.
As others have said the vesting and other conditions will impact how much I would value them. Our company usually gives RSUs at sign-on that are strictly time-vesting ratably over three years, one-third at each of the first, second and third anniversaries. So what dollar value to ascribe? For purposes of a job offer I would probably multiply the number of RSUs that vest on the one-year anniversary by the last close price of the stock. That is not the accounting way of doing it, but for purposes of determining whether the offer is good I think that is how I would think of it. I would do it this way simply because it is unlikely I would leave before a year. But if it is a cliff-vest at three or five years, for example, I might not give them any value. I think the more important is what would equity grants look like on a going forward basis. Finally, I think it's better just to compare overall packages versus trying to put a dollar value to the equity because there are so many variables. For example, Company A is a seasoned, blue-chip issuer whose stock has been slowly but steadily rising for years. Company B is a scrappy statup whose stock gyrates. Even if the equity grant on its face it exactly the same Company B's offer may end up being substantively better - or worse - than Company A. To me, equity is a great icing on the cake and it may help you decide between two offers but if it will make or break whether you can make ends meet then I'd look elsewhere.
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