Comment by frostmatthew | Hacker News Reader

Comment by frostmatthew | Hacker News Reader

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> he most likely will get stuck with quite a bit of stock which might be impossible to offload and very well be worthless by the end of the ESPP

Neither of those are possible. The worst case scenario is a 15% return on your money, even if the stock does nothing but tank over the entire period. You purchase the stock at a 15% discount at the lower of the price at either the beginning or end of the period.

If the stock was at $100 at the beginning and $120 at the end and you put in $1000 you would get 11.7 shares of VMW stock (purchased at $85 each) with a current market value of $1411, you can sell that on the open market the next day for a 41% return.

Likewise if you put in $1000 and the stock went from $100 to $80 over the period you would get 14.7 shares (purchased at $68) with a market value of $1176, a 17% return. It doesn't matter how much the stock goes down, you're still buying a thousand dollars worth of stock at 15% less than market value, even if the stock went from $100 to $10 you'd buy 117.6 shares for $8.5 (which would be worth $1176 at $10 a share).

Factually false. I know people who lost money on ESP, granted it's rare. There is a non-zero delay between determining purchase price and when you can actually sell it. Stocks can and have fallen more than 15% in this window.

For instance, today, VMWare is down 9% and dropped 19% on Oct. 21, 2015.

> Stocks can and have fallen more than 15% in this window.

Possible, but not common or likely. The shares are granted at the end of one trading day (which will be the close of that day if that's lower than at the beginning of the period) and are available for sell the next trading day. e.g. my last ESPP grant was on a Friday and I sold my shares at the open on the following Monday.

So for someone to lose money through the ESPP the stock a) would need to be lower at the end of the period then the beginning and b) drop 15% at the open. Let's say such a move happens once a year to the average stock, there are about 250 trading days in a year so you have a 0.4% chance of that happening. (realistically it's probably even lower than that since drastic moves like opening down 15% are much more likely to occur following an earnings announcement than on an average day and ESPP grants and earnings aren't aligned)

The restricted stock is not tradeable for at least 180 days after it was issued. I've talked to him again his stock were issues and purchased at around 90$ per share now they are worth under 50$. He had about 400 stocks under RSU scheme some where issued as part of an employee compensation process some were purchased he definitely lost quite a bit of money. The process at VMWare for him was that he was getting some of his compensation in RSU, he was also allowed to purchase some of the stock from the company with his per-tax income (this was capped) after the purchasing round ends the stocks are issued and then need to vest for 6 months, during those 6 months the stock lost about 50% of it's value.

> The restricted stock is not tradeable for at least 180 days after it was issued

ESPP and RSUs are two different and unrelated things. Your original comment I responded to mentioned only ESPP.

As for RSUs they're tradeable as soon as they vest, which is typically a year+ after they're granted. The stock can certainly go down between when they were granted and when they vest but it's more accurate to say you made less money then that you lost money. If I buy a painting for a million dollars and give it to you (at no cost) and you then sell it for $800K you didn't lose $200K.

Don't get me wrong I (and every other VMW employee) would much rather see our stock go up then down, but I think you're being a bit unfair to the ESPP and RSU programs. Even when our stock goes down (and it's done pretty much only that since I started...which I hope is just coincidence, ha) it still works out better than the stock options employees at other companies (particularly startups) get.

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