I thought the article would be about something like when you get $100 free chip, you are much more likely to gamble and lose it; or when someone win a lottery, they would quickly spent the money compared to if they had earned the money with hard work.
BTW, behavior economics people like DAN ARIELY in this article got bad reputation after being found fabricating data on the research about honesty
https://www.npr.org/transcripts/1190568472
I wake up every morning in a bed that’s too small, drive my daughter to a school that’s too expensive, and then I go to work to a job for which I get paid too little. But on Pretzel Day… well, I like Pretzel Day
I started to read your blog since the time you encountered a disastrous event with tinypilot hardware (something like a floor or fire). I really appreciate your recording and sharing of your experience and growth. Good luck to your book and look forward to your news.
Imagine back in the days when calculators were just invented. An 8 year old kid might have the similar complain: “my classmate finished a 4 digits number multiplication problem in 5 seconds which generally took 1mins.” People might say, in the long term, the kid who cheated would be less proficient in arithmetic, which turned out to be true. But when you think about it, it seems not the end of the world when most high schooler in US cannot do complicated arithmetic quickly and accurately without a calculator.
I don't buy the argument because the world around us is build for human, we'd better build humanoid robots. Robots with belted wheels or 4 legs can handle stairs, ramps, uneven terrains well, easily and fast. Installing a couple of robot arms on it, you have much more robust robots. Spending so much effort just to solve the moving and balancing is a waste of money and talent.
The best case is to not pay the taxes upfront. Say the company wants me to pay 50% tax in cash and then give me 100% of my vested RSU; I want 50% of my vested RSU without needing to pay taxes.
If on that day, the market price is higher than my estimation, they would inform me and give me 1 day time to pay the difference. If the market price is lower, then I'll have to go through the tax return process with IRS.
True that the company needs to follow regulations. But they could do "net exercise", or "sell to cover". Instead they choose "pay cash or forfeit" path.
I commented with a correction. March 15, 2025 is 140 days from the IPO day. This is before the lockup periods ends and they require us to estimate our tax, based on the fair market value of that date, with the following formula, and pay cash, otherwise the vested RSU will be canceled:
Number of vested RSUs * the estimated fair market value of the stock at the settlement date * the appliable highest marginal federal, state, local income tax rate and employment tax rate.
Even if no one pump up the stock price, the amount of cash needed in such a short notice, is unbearable, which will make most ex-employees to give up their shares.
Right. Instead of the IPO date, or the end of the lockup date, they chose 3/15 as the date to settle the vested RSU. And require us to estimate our tax, based on the fair market value of that future date, with this formula, and pay cash, otherwise the vested RSU will be canceled:
Number of vested RSUs * the estimated fair market value of the stock at the settlement date * the appliable highest marginal federal, state, local income tax rate and employment tax rate.
In theory if someone pump up the stock price for that date, we are screwed. Even if no one pump up the stock price, the amount of cash needed in such a short notice, is unbearable, which will make most ex-employees to give up their shares.
@jameskuang correction: March 15, 2025 is 140 days from the IPO day. This is before the lockup periods ends and is used to determine the fair market value of the stock that taxes are calculated. If the stock drops dramatically between March 15th and the end of the lockup period, ex-employees could lose money (more cash tax is paid than the value the stock can be sold).
BTW, behavior economics people like DAN ARIELY in this article got bad reputation after being found fabricating data on the research about honesty https://www.npr.org/transcripts/1190568472