Your Cheat Sheet to Google RSUs

Being employed by a major company like Google comes with some serious perks, and restricted stock units (RSUs) are part of your compensation package. RSUs -dubbed as GSUs at Google, which stands for Google Stock Units- are a way for employers to grant stock to their employees, in hopes of aligning their work with the performance of the company stock.

While stock prices can tumble over time if the company fails to perform, RSUs are worth something as long as the company remains in business. This is different from stock options which, if the market value of a company is below your strike or buy price, your options are worthless. RSUs may vest at a higher or lower price than they were initially granted, but the point is they have value either way. This makes them a valuable (and variable) addition to any compensation package.

For those who work at Google, RSUs will be part of the package you are offered upon being hired, and you’ll likely receive refreshers which will add to your unvested shares during your performance reviews. 

Does Google Give RSUs to Employees?

Google compensation packages are made up of three key items: salaries, bonuses, and stock. 

Salaries are determined by your role and level of experience, while bonuses may be awarded annually depending on your personal performance and company performance.

In addition to this, you’ll have equity in the company, awarded as Google’s own version of RSUs, Google Stock Units (GSUs). Each GSU is each equal to one share of the stock, though they are given to you over time in a process known as vesting. You will be subject to taxes on this as income as your Google RSUs vest. 

How Many RSUs Do Google Employees Get?

The number of RSUs that a Google employee can expect to receive can vary. Some people are able to negotiate more, as these are effectively a part of your compensation. Consider how much these Google RSUs are worth to you -and how much risk you would like to take- and you may be able to negotiate to have more in lieu of a higher salary or a higher sign-on bonus. If you intend to stay in your position long-term and the stock performs well, this may work out in your favor. Make no mistake, this can also work out poorly as we’ve all experienced in the market selloff during 2022, in which many tech stocks have seen some of the steepest declines in the last 20 years. 

So, how does this work? You will receive the number of GSUs that is equal to the intended value in your offer.

Example, you are awarded a grant of 10,000 shares upon hire. If the stock is trading at $100 per share, the value of this grant is $1,000,000. You don’t actually own these shares or pay tax on them until they vest. Your vesting schedule will be clearly outlined in each grant.

When Do Google RSUs Vest?

While some of your Google RSUs will vest in the first year, you will not receive your full sign-on grant until you have been there for four years. They vest on a scale depending on what year of employment you are in, with the earlier years vesting more Google RSUs.

The standard sign-on grant vesting schedule is this: In years one and two, you can anticipate your RSUs vesting at 33% per year. The third year will vest 22%, and the fourth year will give you the remaining 12%.

The front-loading design of these grants allows you to earn the shares faster in the event that you decide not to stay at the company for the full four-year term.

What Can You Do with Google RSUs After They Vest?

The good news is that you can do just about anything you want with your Google RSUs after they vest. After all, those shares ultimately belong to you. However, here are a few savvy investment moves to consider.

Boost your 401(k) contributions

Investing in your retirement accounts early and often can yield big dividends over time thanks to compound interest. Google offers even more benefits for employees who choose this route, with a dollar-for-dollar match up to $3,000 or a 50% match up to the IRS maximum ($20,500 in 2022 for everyone under age 50, resulting in a match of $10,250).

You can also consider an “after tax” strategy for your Google 401(k), aka “Mega Back-door Roth,” which would let you potentially contribute an extra $30,250 to your 401(k) after taxes.

Contribute to a 529 account

Current or future parents can use this money to plan for higher education for their children. An investment in your child’s 529 plan comes with tax-deferred benefits, and you can use the money for qualified expenses completely tax-free. You can also use a maximum of $10,000 per year for K-12 tuition if you want to send your kids to private school.

Bolster savings or pay down debt

The extra money can be used as a bonus of sorts, allowing you to build an emergency savings fund, pay down high-interest debt, purchase a house, or any other financial goal you have in mind.

Keep in mind that you may have to pay taxes on the Google RSUs that you cash in. Consult with a company like Consilio to make sure you make the most of your GSUs. 

Take the Right Path

The truth is that many people find RSUs to be quite complex. However, when used strategically, they can be extremely beneficial financially. Get guidance from experts so that you don’t waste the potential of your GSUs. This is where Consilio can step in to help you.

We eliminate the jargon and take the time to understand your financial goals to help you make the next savvy money move that will make your goals come to life. If you feel confused about your RSU options, then reach out to Consilio Wealth Advisors today to learn more about using them to your advantage!

DISCLOSURES: 

No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. 

All investments include a risk of loss that clients should be prepared to bear. The principal risks of CWA strategies are disclosed in the publicly available Form ADV Part 2A.

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Although bonds generally present less short-term risk and volatility risk than stocks, bonds contain interest rate risks; the risk of issuer default; issuer credit risk; liquidity risk; and inflation risk.

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