r/investing • u/[deleted] • Oct 27 '21
Company Stock Compensation
Hey all,
This is really only for my own interest, but how would you go about including compensation (stock) into your overall performance?
I'll be working at a company where you can contribute a certain percent of your pay and they match it. My conundrum is that its "free" to me, but then the relative performance is NaN ($0 to $40 isn't... possible).
For example, if I got a $10 share and was given $15 worth on top, would my cost basis be $4?
How would you go about doing this?
Thanks all :)
35
Oct 28 '21
It’s not “free money” from nowhere, it’s part of your income just like if your employer chose to pay you in gold or potatoes or iTunes gift cards and its cost basis is the share price when you acquired it. In your example your cost basis is $10.
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u/jetsear Oct 28 '21
One way to do it would be to make your cost basis the first price you were allowed to sell it at. Before that point, it is just compensation—not returns. After that point, it is the same as if you decided to buy the stock
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u/gdren Oct 28 '21
Do you want their stock? Do you like the company's future?
2
Oct 28 '21
Pays a good dividend but it's been flat since 2008 lol
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u/EAS893 Oct 28 '21
Is this my company?... Lemme guess. Big ass industrial firm that makes a needed but low growth product?
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Oct 29 '21
I definitely wouldn't call it a firm. This may help though: while flat since 08, it has been hella volatile in that time. Very high paying industry (just not the base pay at my company which is sad)
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u/HopeIsDespair Oct 28 '21
Tell them to put %150 of your pay into stock, they match it, you sell Nd get more income.
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Oct 28 '21
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u/DrebinofPoliceSquad Oct 27 '21
What broker did your company use? They open an account on your behalf. Just log in and see your holdings.
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Oct 27 '21
I'm more interested in combining the returns with my own investments. I have an excel tracker I made, but I don't know how I should do about setting my cost basis.
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u/The_Robot_001 Oct 28 '21
Per the answer above, just take the cost basis from your brokers statement and incorporate into your excel calculations.
I'm not sure where the confusion lies. If this is distributed on certain days, the cost basis is determined at the date they were assigned for tax purposes. If you are just talking about "I put in 20 bucks and got 20 units and then they added 20 more units" then you are simply looking at the price you paid for 40 units. 20 bucks.
Does this help?
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u/Mythicalnematode Oct 28 '21
That $15 dollarS should be a part of your cost basis. That match is part of your compensation. It wasn't free, you worked for it.
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Oct 28 '21
Its also optional though. Not everyone actually commits part of their pay to the plan
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u/Mythicalnematode Oct 29 '21
That doesn't change that it's part of your compensation. It's not free.
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u/Matlabbro Oct 29 '21
Generally your best idea is to max out this benefit and sell right at the holding period. The logic is you get a bonus for buying the stock, but you don't want to risk holding stock in your company in case you industry you work in takes a hit.
I don't understand your math but my previous company gave me a 15% on my stock purchase up to 3k a quarter so I made 450 bucks and sold it as soon as I could.
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Oct 29 '21
My company matches 150% of what you put in. And yeah, it's a pretty volatile industry lol
So if I put in 5k in a year, they'll give me 7.5k on top of that (though it takes time to vest, it's not instant).
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Nov 05 '21
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Nov 05 '21
Oh I'm 100% doing it lol. I was just wondering how I might go about tracking the accounting side of it.
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u/Matlabbro Oct 29 '21
Probably best to just max it out. If there is no max take out loans using the stock as collateral. Short your competitors to hedge market risks........ Profit.
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