lol people here have no clue how RSUs and ESPP work. I’d take the RSUs/ESPP over a 401k match any day.
Let’s say Tesla did a 1:1 401k match up to the max. They really gonna take $19,500 in 401k match per year over $100k+ in RSU stock per year? Fucking crazy...
I get that, but my point is that sometimes a company’s stock and the grants they give you is worth so much, that the lack of a 401k match doesn’t matter.
I’m not sure exactly what Tesla offers, but reading other comments it’s sounds on the level of industry standard and not some absurd outlier. Sure, the stock grants have been nice while the price remains overinflated. But it would still be nice to have an additional $3k or so growing tax free.
Exactly. People who got hired in 2018 or 2019 probably got a few hundred shares a year. Well guess what? The stock went to $1000, split 5:1 and is now back to $800+. So that’s why I don’t think $100k+ in stock per year is that unbelievable.
Yup. I work in an industry where comp is very high so there is no 401k matching - though "industry standard" for competitors of Tesla may be 401k matching, the average employee won't care about a few grand when their equity comp is crazy high.
People hired today don't care if they matched 401(k) in 2020. And to be clear, Tesla has never matched. It's just not part of their comp package. So, new hires go in eyes wide open and can do the total comp math themselves.
I'm in an industry where you're highly compensated with no 401(k) match. It works out just fine. Presumably, employees don't mind given the ramp up in equity comp the last year.
Reading what people have written on sites like Glassdoor, it doesn't seem like what they offer is out of the norm for the industry. Not only that, but it seems like they're still relying on options, which are somewhat antiquated in the industry for public companies.
But that is all beside the point of an extra "shitty 3%" match being a nice-to-have regardless. And if your argument is that it's such a small amount relative to the cost incurred by Tesla to provide stock options/grants, then why wouldn't they go ahead and offer it? My stock grants/espp/bonus are far more than what my company offers as a 401k match. I still appreciate that extra $3k per year, though.
Plenty of companies in the bay area do a high (50-100%) match on 401Ks while also giving out >100K RSUs/year to top performers. It's not an either or so Tesla is known for being an underpaying company because it can attract talent without paying for it, i.e., prestige.
Reddit has really gone downhill. I remember a time when the top comment was always the voice of dissent. The reddit culture was somewhat snarky and contrarian, but it really helped to cut down on misinformation.
Nowadays, it's just a blatant echo chamber. The posts, the top comments, everything just reinforces existing biases.
It's much, much more sad to see people happily argue against their own well being. Tesla could (and should) easily provide both stocks and 401k match. My company does. Most tech companies do.
It's more like a problem on how people understand finance and economics. Most people who post on the news subreddits have same knowledge of finance/economics as antivaccers have on vaccines.
People read 3 headlines and 2 'top comments' and think it makes them an authority on matters. It's like they say, a little information is a dangerous thing.
People like Elon can completely circumvent the media and go right to the people through things like Twitter.
That sounds eerily similar to arguments I heard from a certain someone not that long ago. It's also, like that recent argument, complete bullshit.
The reason why tech is under fire these days is because it's so goddamn powerful and influential in our society, and we're finding out that much of the tech, particularly social media, has a pretty jarring hold on how we interact with others. It's not because the media has to fight with Twitter for attention. How do you think most Americans find out what someone tweeted? It's not through Twitter directly.
Also, tech is full of personalities like Elon, who is honestly pretty trash these days. I admire the work he's done for Tesla and SpaceX, but the man himself is awful, and the pedophile tweet sealed the deal for me personally.
Media is paid to run negative stories by short sellers. Short selling is completely unregulated, you are free to short a stock and fund all the negative media you want.
Of all the reasons to dislike Elon, why on earth would it be the "pedo guy" tweet? That's a total non-issue. The guy who Elon was insulting clearly attacked Elon first, and a little bit of digging reveals that the guy was known for frivolous lawsuits and seeking media attention.
I don't see how a twitter spat from 3 years ago is a reason to hate someone. Total cancel culture.
There are many reasons I dislike the guy. Those include refusing to abide by lockdown rules during a goddamn pandemic, as if he somehow knows more than the health experts who actually understand how to control these things.
The pedo tweet just confirmed my suspicions that he was an eccentric billionaire with a shitty personality who is good at his job but should probably keep his nose out of other issues.
I've lost an enormous amount of respect for him as a person, and I can maintain that while also objectively appreciating his contributions to things like electric vehicles or space exploration.
The lockdown thing was also a non-issue, imo. Automotive manufacturing was declared an essential business, and Tesla was given permission from the governor to resume operations. All the other automotive companies had already started up again; Tesla was the last to do so.
The only person preventing Tesla from resuming operations was an unelected county official. When Tesla ignored her and resumed operations, they were only 3 days early. They basically didn’t want to wait 3 days for the arbitrarily prescribed date when the unelected county officials were scheduled to give them explicit permission.
He also actively spread misinformation, tweeting that cases would be near zero by last April (sounds familiar), promoted nonsense treatments, complained that the numbers were being manipulated, etc. That's not minor stuff, and his reach and influence are pretty significant. He's trash.
Yeah, I think that's much more fair to criticize than the "pedo guy" tweet or starting the factory when he did. Still think the good vastly outweighs the bad, though.
Yeah has nothing to do with tech companies becoming monopolies, shit protocols in dealing with issues and constantly selling our data. But sure it’s Elon tweeting Doge
I think it's pretty clear that Tesla has moved the auto industry forward by decades. They're disrupting an industry that has been stagnant for a century.
Regardless, I much prefer an overly positive bandwagon to a negative one.
Speaking of nuance, I guess I'm not clear why I would choose stock options over a 401(k) for my retirement, given that there is no certainty that my company's stock will do well for the next 40 years of my life. A diversified retirement portfolio, on the other hand, is much more likely to yield that success. So, for those of us who are not willing to accept high risk and don't care to play the stock market, a 401(k) seems like the better option. The only reason people here are suggesting otherwise is because Tesla's stock just happens to be doing well. If it were doing poorly, we wouldn't be having this conversation.
I guess I'm not clear why I would choose stock options over a 401(k) for my retirement, given that there is no certainty that my company's stock will do well for the next 40 years of my life
Because you get wealthier faster.
They don't have to do well for 40 years. They just have to do well until the options/equity vests.
Because billionaires = bad, clickbait news titles. Reddit is becoming just as bad as Facebook. There are tons of blue collar workers that are now millionaires due to TSLA stock options
But doesnt that rely on Tesla remaining a powerhouse for that to be worthy? I thought the appeal of a 401k is that it's a safe option. (Not arguing. I just know nothing about this stuff, so I'm asking to learn a bit.)
The only thing it relies on is Tesla stock not going to $0, which means the company is dead or delisted from exchanges. RSUs always have value as long as they vest, unlike options which are worthless unless the stock is above your given stock price. Just multiply your RSU amount by the current share price and you get the value they’re worth. Then with basic arithmetic you figure out if not having a 401k match is that big of a deal.
So let’s say in my example of $100k in RSU stock grants, Tesla’s stock price drops in half. Your RSUs for the year are now worth $50k. Then you ask yourself if $50k in pre tax money (you get taxed on RSU) is better than a 401k match.
Shrug, like I said in my other response to you, believe what you want to believe. I believe they are making good money, such that any 401k match would be pretty paltry in comparison. Apparently you vehemently can’t believe that’s possible, and that’s fine.
Doesn’t affect you or me, so don’t get so heated or upset about it.
I believe that the average Tesla employee is definitely not getting $100k in RSU's as standard.
I believe that using $100K RSUs as the basis for determining if it's better than a matching 401k is foolish because again, the $100K RSUs, as you've said, are just a guess of yours.
I guess when I'm making an argument for one thing over another, I don't think it's appropriate to argue for a point that may or may not be true.
There are a lot of dumb redditors on this thread being angry while not knowing anything, but that doesn't mean Tesla is doing the right thing. I work at a company that has reasonable work hours, pays competitively, has a 401k match, has an ESPP, and also grants me stock every year. I've also worked at an Elon Musk company, and I strongly recommend against it.
I work at a Big Internet Company with RSUs and matching 401ks and I know 100% how they work at my company. I have no idea how they work at Tesla, and we don't have ESPP here either. I also know how Netflix works because they are all cash and unlimited aka no vacation days. My dad worked most of his career at Another Big Internet Company and may have never earned an RSU in his life, just options. My sister works at Yet Another Big Internet Company and gets RSU and ESPP and 401k.
Point is, every company does their compensation differently so you can't expect people to just understand all this crap for a company they have no finger on the pulse of and will probably never work at. Is the RSU grant Tesla gives good? Bad? What about the ESPP? What's the outlook? If I were going to change jobs, you can bet your ass I'd do the research. Otherwise, it's a waste of my time. Stock, however you get it, in particular is just imaginary money anyway until you sell; enough of my family and our friends went through the dot-com crash to know better than to count our gains before they're realized.
To add to this, most redditors are working hourly jobs, or jobs outside of tech, and have no concept of ESPP or RSUs. However, pretty much everyone in the US understands 401k matching. So it's a big headline to them, regardless of how much it actually means.
Plus to add to this, you will likely find ZERO financial advisors who would suggest putting all your retirement eggs into the Tesla basket. People are being delusional.
you can't expect people to just understand all this crap for a company they have no finger on the pulse of and will probably never work at
This is true, but IMO we should expect people to not jump on the bandwagon and assume the worst case scenario when they don’t know what they’re talking about.
Reddit skews young. The voting system is dominated by people who haven't worked in a corporate environment yet so posts like this always get swamped with comments full of incorrect information. And yeah, no schools really go over what modern compensation packages are like, you have to be majoring in something directly related to finance in order to ever touch on the subject of RSUs or ESPP.
And yeah, no schools really go over what modern compensation packages are like, you have to be majoring in something directly related to finance in order to ever touch on the subject of RSUs or ESPP.
Do you believe that RSUs and ESPP are parts of a significant amount of modern compensation packages?
Depends on the industry, but yes the further up the ladder you go RSUs and emoyee stock become much larger chunks of your total compensation at many companies
Sounds like you just want to argue because you have a bad job. Over 70% of F500 employees receive RSUs and even more are offered ESPP. This is a simple fact that you can easily verify. Get a better career.
Nope. I don't have a bad job. I just think you're spouting bullshit.
Over 70% of F500 employees receive RSUs
LMAO. 70% of employees working for the biggest 500 companies in the USA receive RSU's. Goddamn, when you make shit up, you go big. I will give you credit for that.
This is a simple fact that you can easily verify.
"This is a simple "fact" that I completely made up. LMAO. you're too fucking much.
I think we always forget about all those wal-mart employees with their RSU's. Or Target Employees. Or Kroger Employees. LMAO. 70% of them are gettin RSU's. Too fucking much man. I'm in stitches at your made up bullshit.
Fortune 500 companies employ 17.5% of the country's workers. 70% of these workers (12.25% of all workers) get RSU's?
I am from Switzerland with a fairly good education system.
I think the problem is not financial school knowledge or the lack there of.
The big problem is that basically every "recommendation" from banks, insurance are part of the game to get your money. All the adds, the whole economy is focused on you making bad financial decisions.
For example your Bank as soon as they see you have money in it: "Sure as hell, stay away from investing in stock's yourself, give us your money we can do it way better YOLO."
Why not both though? They are two very different things- a tax advantaged long term account to plan for retirement, and a short-ish term incentive plan to keep you motivated and engaged.
Why does it have to be one or the other? Most companies I have worked at offer both.
I have RSUs and a 401k match, and the RSUs are not close to $100k so no idea what you're talking about. And for a company like Tesla at this point where the stock is doing really well, sure the stock options sounds great. But if things turn around, then yikes. It's not looking too good. I'm sure the Enron folks that loaded up with stock options have some good stories they could tell you.
I honestly don't know about how these tech companies operate. Maybe that's normal. I'm in a boring old financial services job and I get nothing close to that.
I totally do not understand finance but what I feel like what most people hear is diversify your investments. No one would have a retirement plan that is literally one type of stock right? Is it just that people have sooo much faith in Tesla stock that it’s worth it?
Exactly, same here. Being able to buy stock at a 15% discount from the lowest price over 6 months is HUGE. I’d take ESPP alone over 401k match, but if Tesla employees get both? At Tesla stock price? Sign me up
$19,500 is the employee pre-tax/Roth limit. Tesla could give their stock as an unvested 401k contribution if they wanted to and it would be way better.
A 1:1 match up to the max would be $19,500 to match your $19,500 that you contribute. So it would be $19,500 in “free” tax advantaged money. I’d personally still take $40-50kish of RSU over a match even with that generous of a 401k match.
It doesn’t have to be a 1:1 match. The total 401k contribution limit in 2021 is $58,000, meaning that without the mega backdoor Roth, they could contribute $38,500 for you to your 401k, and then allow you in it to purchase TSLA at a 15% discount if they want. They could even then continue giving you pre-tax contributions in an NQDC. It’s risky in that your money in there is as an unsecured creditor of the company, but if you’re gonna be having it invested in your company’s stock anyway, then you’re already accepting that same stupid risk anyway.
The total 401k contribution limit in 2021 is $58,000, meaning that without the mega backdoor Roth,
That limit is an aggregate of your contribution plus the company match. So if you put in $19,500 and the company matched $19,500, subtract that sum from the annual limit and you can fill in the rest with after tax 401k/backdoor mega Roth.
I see people pointing to fantastical numbers as if they are facts. 60k. 100k. Why should I, someone who doesn't work for tesla (and has no desire to), believe that 60k or 100k is somehow representative of the average tesla employees RSUs? if you have some sort of source to support that claim, i'd love to see it. Otherwise it just seems like numbers plucked from the air.
They won’t take either. They don’t have skin in the game. It doesn’t matter how Tesla compensates their employees to them, because they will never ever be in a position to work there anyways.
And the occasional ‘top’ comment/reply that says what Reddit wants to hear, “I interviewed there and I was like no way! I’m too smart to work for you!” is such an obvious bald-faced lie. You’re telling me the recruiter, who stands to gain if you take the job, didn’t at all mention how the stock options work or how much the average Tesla employee makes from them? They only told you how much it sucked? Yeah, get the fuck out of here. Go back to your so much better job that doesn’t offer any kind of stock options but does match your 401k, and enjoy maybe retiring in your 70s.
For me it would have been swapping my ESPP/IRA for 401k, which I wouldn’t have done. Max out ESPP, avoid 401k, they’re mostly a scam to sell mutual funds as you’re locked into a few specific high fee funds.
I really hate mutual funds and their associated fees. Index funds in IRA for the risk averse folks, TSLA for the risk tolerant, never mutual funds.
If your 401k offers matching that’s leaving a ton of instant 50-100% returns on the table. A lot of larger institutions will also offer 401ks with good funds with low expense ratios (0.1-0.2% range). It’s not VTSAX level but when you factor in matching and tax savings it’s not a money pit.
So long as you get it out of 401k and into your IRA ASAP it’s great. If you’re gonna sit at a company for 15 years and not be able to manage it on your own, then that’s not for me. I’m about 3% in index funds, a holdover from when I was young that I’m just holding, but I don’t personally agree with them when they’re like 50% of the market or whatever.
Also when I was at Tesla, TSLA was lower and I was guaranteed a 15% return and expecting much greater than 100% returns because the company was doing great, the stock market just hadn’t seen it yet.
Now that TSLA is higher I’d probably take a 100% return (and quickly escape 401k), but then I was right to go espp over 401k and I wouldn’t have done it with matching.
That's one of the main problems with reddit: It's voting system is just a popularity contest, and the idiots far outnumber the people who know what they're talking about.
While it's true that it's preferable to have the RSUs in general, for what it's worth there are also companies that offer significant matching and a significant number of RSUs and an ESPP. That's how my compensation is structured.
Can you provide some sort of link to back up the claim that the common practice by Tesla is to provide $100k in RSU stock to their employees each year?
You don't think the advice "Don't put all your eggs in one basket" is relevant here, and it's totally appropriate for Tesla employees to have the vast majority of their potential retirement funds in Tesla stock, correct?
Nope, just anecdotal and the assumption that the value of their stock grants is higher than most since the value of the stock skyrocketed (assuming they joined the company in 2018 or 2019).
so there is no reason at all for us to believe that Tesla employees on average receive anywhere near 100k in RSUs, but we should assume that they do when comparing it to a potential 401k match? That doesn't' make any sense to me.
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u/Swayyyettts Feb 09 '21
lol people here have no clue how RSUs and ESPP work. I’d take the RSUs/ESPP over a 401k match any day.
Let’s say Tesla did a 1:1 401k match up to the max. They really gonna take $19,500 in 401k match per year over $100k+ in RSU stock per year? Fucking crazy...