Retiring Early and losing RSUs

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Mike1765
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Retiring Early and losing RSUs

Post by Mike1765 » Wed Mar 13, 2019 8:44 pm

I've worked at mega-corp for a few years and have a substantial amount of unvested RSUs. I plan to work there several more years and retire relatively early to spend more time with my SO and child, but giving up the RSUs will be hard. The RSU agreement states that if you formally retire the RSUs vest immediately, but you can't do this before (age+years of service)=65...I'll never make it that far. The agreement also states that if I quit, the RSUs are canceled, but if I'm laid off I can keep them. Does anyone have experience exiting a company in a similar situation? I'd be interested to hear how it went.

It seems like the best thing to do is mutually agree for me to be technically laid off when I'm ready to retire, but what if they don't agree to this? Do I basically sit around and wait for vesting? This seems like a bad situation for everyone. I get that one main point of RSUs is to deter people from going to a competitor, but for anyone hoping to retire early or just change career paths, they create a problem.

AlohaJoe
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Re: Retiring Early and losing RSUs

Post by AlohaJoe » Wed Mar 13, 2019 8:51 pm

Mike1765 wrote:
Wed Mar 13, 2019 8:44 pm
Does anyone have experience exiting a company in a similar situation? I'd be interested to hear how it went.
There's no trick.

You quit & lose the RSUs.

No company is going to "technically lay you off" just so you can keep RSUs. They will be more than happy to reclaim those RSUs and give them to someone who actually still works at the company and is creating value at the company.

When I quit in a similar position, I walked away from (what would have been, over several years of vesting) maybe $1,000,000 in RSUs. The CEO called me to make sure I was sure. They certainly weren't going to bend over backwards to let me keep them, even though that's a company that has won "best place to work" type awards multiple times.

Dottie57
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Re: Retiring Early and losing RSUs

Post by Dottie57 » Wed Mar 13, 2019 8:55 pm

AlohaJoe is right. You either work and collect your RSUs or claim your life as wholly yours.

TheDoorMan19
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Re: Retiring Early and losing RSUs

Post by TheDoorMan19 » Wed Mar 13, 2019 9:03 pm

The purpose behind the RSUs is to incentivize you to stay, not really to prevent you from going to a competitor (since vesting is tied to you staying, and if you leave you forfeit whether or not you go to a competitor). You could try to negotiate continued vesting for a part time or consultant role, particularly if they are going to have a hard time filling your postion. Otherwise, you are stuck in exactly the predicament the program was designed to put you in. Lot of people with pensions face the same exact choice, because every year or service toward the end of your career has a huge actuarial value.

jminv
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Re: Retiring Early and losing RSUs

Post by jminv » Wed Mar 13, 2019 9:33 pm

Find a way to get them to lay you off without getting fired instead.

chw
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Re: Retiring Early and losing RSUs

Post by chw » Wed Mar 13, 2019 9:34 pm

I retired at age 58 with RSUs that vested over 3 years from a Mega Corp as well. I technically didn't retire from the firm, as I only had 10 years of service (needed 15 years), but if I recall my age and years of service allowed me to leave the firm conditioned on: 1) providing at least 90 days notice, 2) sign a certifion that I was not going to work within my field of expertise, and 3) get acknowledgement from my business line HR that I was an employee in good standing at the time of notice. I also need to initiate an annual certification to Executive Compensation that I continue to not work within my previous profession.

It sounds like your main issue may be the age + service not meeting 65. It's a shame that employers have these evaporating RSU clauses in their comp plans, as it seems to mainly impact mid career execs, that end up feeling trapped in jobs due to high levels of unvested RSUs. I wonder if the issue will fodder for class actions in the future.

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Re: Retiring Early and losing RSUs

Post by marcopolo » Wed Mar 13, 2019 9:36 pm

I will provide a dissenting viewpoint from some of those above.

It can be done, but requires the right set of circumstances.
I was fortunate enough to be able to do just what you describe a little over a year ago to take an early retirement in my early 50s.
Rather than re-hash the details, here is a link to the thread where I sought advice on how to go about it, the possible risks, etc.

viewtopic.php?f=2&t=232559&p=3623579#p3623579

Good luck to you.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Skiandswim
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Re: Retiring Early and losing RSUs

Post by Skiandswim » Thu Mar 14, 2019 3:29 am

+1
Customized exit agreements are done at many corporations. Do your homework by talking with some associates that have "retired" early. Reasons the firm might agree to early RSU vesting ... they desire you to sign non-compete, downsizing, restructuring your position, medical situation, want you to consult for a period of time, etc.

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Re: Retiring Early and losing RSUs

Post by stickman731 » Thu Mar 14, 2019 4:09 am

Four years ago, I accepted a voluntary severance package and were allowed to keep my RSUs. They have now fully matured and I executed them.

Check you agreement about voluntary separation. If it is included, if you hear anything about workforce reduction toss you name in the hat explaining you need to spend more time with the family.

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Mike1765
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Re: Retiring Early and losing RSUs

Post by Mike1765 » Thu Mar 14, 2019 4:37 am

Thanks for all the replies. Seems like it varies quite a bit from company to company. It still seems like there's a potential odd outcome. Basically, if someone says they want to retire early but the company won't agree to a planned exit, they basically show up every day for 3 years and browse the internet at work 6 hours a day, collect a salary, health insurance, and get the RSUs, and if the company are lays them off,the RSUs vest anyway. A non-productive employee is VERY expensive. All the RSU documents say an employee loses the RSUs if fired 'for cause', so of course, they couldn't do something extreme, but I don't think being non-productive counts as fireable 'for cause'. I know this is extreme...I personally wouldn't want to do this as it seems like a bad option for everyone...but isn't it an option for someone in this situation?

bltn
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Re: Retiring Early and losing RSUs

Post by bltn » Thu Mar 14, 2019 5:15 am

With no personal experience working for a megacorp or receiving rsu s, I have a couple of impressions regarding your situation.
If you are able to receive the rsu s in three years, I would think carefully about retiring before then. Over the next three years, you ll not only get three additional years of retirement savings, but the rsu s, which should be a significant addition to your retirement savings. Two reason to retire early, among others. You have grown to really hate the job. Or your health has deteriorated to an extent that it becomes an issue for continued work, or time in retirement.
Early in my working life, I had a job I hated so much, I left. Fortunately, I ve never had another job I left for that reason.
I personally would work my job for three years and try to remain productive. But that s just part of my overall frugality and desire to maximize my rerirement savings. I can be a little extreme in that regard. So I ve been told (by my wife).

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sunny_socal
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Re: Retiring Early and losing RSUs

Post by sunny_socal » Thu Mar 14, 2019 5:52 am

I quit my job and "lost" 100k in RSUs. You need to decide whether the carrot is worth it.

Longdog
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Re: Retiring Early and losing RSUs

Post by Longdog » Thu Mar 14, 2019 5:53 am

Mike1765 wrote:
Thu Mar 14, 2019 4:37 am
Thanks for all the replies. Seems like it varies quite a bit from company to company. It still seems like there's a potential odd outcome. Basically, if someone says they want to retire early but the company won't agree to a planned exit, they basically show up every day for 3 years and browse the internet at work 6 hours a day, collect a salary, health insurance, and get the RSUs, and if the company are lays them off,the RSUs vest anyway.
Personally I think that’s your best option once you reach the point where you’d retire anyway, with or without the RSUs. That is, if you can tolerate it. And yes, it’s very dysfunctional.
Steve

TravelGeek
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Re: Retiring Early and losing RSUs

Post by TravelGeek » Thu Mar 14, 2019 6:56 am

Any exit (fired, lay-off, voluntary resignation) at my former employer leads to loss of RSUs or unvested options.

newinvestor54
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Re: Retiring Early and losing RSUs

Post by newinvestor54 » Thu Mar 14, 2019 6:59 am

RSUs are about 40% of my annual compensation and I just consider them part of my compensation like salary or bonus. If you retire, you won't get next year's salary or bonus, why should you get next year's RSUs? Every year I get another multiyear RSU grant so I will never get to the end where they are all vested. I've got about $800k unvested but I expect to have the same amount unvested a year from now and the year after that as old grants vest and new grants are received. I'd love to have them vest after I retire, but that's not how it works at my mega tech corp. Oh well

marcopolo
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Re: Retiring Early and losing RSUs

Post by marcopolo » Thu Mar 14, 2019 7:15 am

Mike1765 wrote:
Thu Mar 14, 2019 4:37 am
Thanks for all the replies. Seems like it varies quite a bit from company to company. It still seems like there's a potential odd outcome. Basically, if someone says they want to retire early but the company won't agree to a planned exit, they basically show up every day for 3 years and browse the internet at work 6 hours a day, collect a salary, health insurance, and get the RSUs, and if the company are lays them off,the RSUs vest anyway. A non-productive employee is VERY expensive. All the RSU documents say an employee loses the RSUs if fired 'for cause', so of course, they couldn't do something extreme, but I don't think being non-productive counts as fireable 'for cause'. I know this is extreme...I personally wouldn't want to do this as it seems like a bad option for everyone...but isn't it an option for someone in this situation?
Are your RSUs a one time grant, or do you get replenished each year?

If the former, your plan might make sense (those years in limbo will seem reaaally long), if the latter, you will always have this problem of walking away from a significant unvested amount.

I had rolling replenishment, such that each year i received at least as many RSUs (usually more) than I cashed out, so the potential dollars left on the table kept increasing each year. I was very fortunate to be able to capture that at my exit. That opportunity is not common. So, if yours are replenished, you should start mentally preparing yourself to walk a way from some of it at some point.
Once in a while you get shown the light, in the strangest of places if you look at it right.

willyd123
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Re: Retiring Early and losing RSUs

Post by willyd123 » Thu Mar 14, 2019 7:52 am

Hello -

My role at my company is to manage the RSU plan, among other things. Very few companies will violate the plan provisions directly as this creates all sorts of legal risk. However, in my experience it is quite common that if a company wants an employee to "move on" on the company's desired timeframe that they might induce this by compensating the employee for a portion of the value of the RSUs. Obviously you'd need to handle this discussion very carefully but if you have a good relationship with your manager you could broach the topic and try to see if there's an openness to the idea.

The other point I'd make is that "we" design the various reward programs to retain employees and no matter when you want to retire, you will be leaving money on the table. There's always another bonus, another vesting date, etc. by design. In my role I've talked to many people who have plenty of money to retire but they continue to work because they can't bring themselves to leave money on the table. In my opinion they've missed the whole point...you work to accumulate enough assets so that you don't have to work anymore. Of course, if you love your job, that may be a reason to continue working. So my recommendation is to forget the money if you have enough to retire and you don't love your job.

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stickman731
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Re: Retiring Early and losing RSUs

Post by stickman731 » Thu Mar 14, 2019 9:38 am

Mike1765 wrote:
Thu Mar 14, 2019 4:37 am
All the RSU documents say an employee loses the RSUs if fired 'for cause', so of course, they couldn't do something extreme, but I don't think being non-productive counts as fireable 'for cause'. I know this is extreme...I personally wouldn't want to do this as it seems like a bad option for everyone...but isn't it an option for someone in this situation?
Performance firing is Cause.

KlangFool
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Re: Retiring Early and losing RSUs

Post by KlangFool » Thu Mar 14, 2019 9:42 am

Mike1765 wrote:
Wed Mar 13, 2019 8:44 pm
I've worked at mega-corp for a few years and have a substantial amount of unvested RSUs. I plan to work there several more years and retire relatively early to spend more time with my SO and child, but giving up the RSUs will be hard.
Mike1765,

Don't count the chicken before the egg hatches. It is entirely possible in a few years that your mega-corp went bankrupt and the RSUs worth nothing.

KlangFool

ponyboy
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Re: Retiring Early and losing RSUs

Post by ponyboy » Thu Mar 14, 2019 10:03 am

Ah, the RSU's. No matter what, you'll never get all of your rsu's. You can work till you die and you'll still leave some on the table. Corps know this. I would never factor in RSU's when taking a job. But people fall for it all the time.

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JoeRetire
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Re: Retiring Early and losing RSUs

Post by JoeRetire » Thu Mar 14, 2019 10:05 am

Mike1765 wrote:
Wed Mar 13, 2019 8:44 pm
It seems like the best thing to do is mutually agree for me to be technically laid off when I'm ready to retire, but what if they don't agree to this? Do I basically sit around and wait for vesting? This seems like a bad situation for everyone. I get that one main point of RSUs is to deter people from going to a competitor, but for anyone hoping to retire early or just change career paths, they create a problem.
Yup. Don't retire early.
Don't be a lemming.

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Re: Retiring Early and losing RSUs

Post by Darth Xanadu » Thu Mar 14, 2019 10:33 am

Here's another option to consider: find another employer willing to buy you out of your RSUs in cash. Even if you have to negotiate a "cents on the dollar" arrangement, it could be a good middle ground. Now, many companies will also put vesting restrictions on such a buy-out, but perhaps you can negotiate a shorter time-frame (i.e. 75 cents on the dollar for unvested RSU value, with 1 year clawback ... which gets you 75% of value after 1 year vs. 33% per year over 3 years or whatever your company's arrangement is).
"A courageous teacher, failure is."

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N1CKV
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Re: Retiring Early and losing RSUs

Post by N1CKV » Thu Mar 14, 2019 10:37 am

If they RSUs will never vest to you then ignore them as part of your compensation. It is just that simple.
If your compensation does not make sense otherwise then walk and go somewhere else.

quantAndHold
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Re: Retiring Early and losing RSUs

Post by quantAndHold » Thu Mar 14, 2019 10:43 am

The technical term is “golden handcuffs.” You will never be free of them, as long as you’re working for that company. If you can manufacture a layoff, great. The company I worked for didn’t have that clause in the RSU agreement, and wasn’t laying people off, so if I wanted out I needed to leave the RSU’s on the table when I left.

I left 7 figures of unvested RSUs. When it was time to leave, I just gave notice and left.

Random Poster
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Re: Retiring Early and losing RSUs

Post by Random Poster » Thu Mar 14, 2019 11:08 am

ponyboy wrote:
Thu Mar 14, 2019 10:03 am
Ah, the RSU's. No matter what, you'll never get all of your rsu's. You can work till you die and you'll still leave some on the table. Corps know this. I would never factor in RSU's when taking a job. But people fall for it all the time.
Not at my employer.

All unvested RSUs immediately vest upon one's death.

So by working until one dies, you (or your Estate or heirs, more accurately) are guaranteed to get all of your RSUs.

diy60
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Re: Retiring Early and losing RSUs

Post by diy60 » Thu Mar 14, 2019 11:36 am

ponyboy wrote:
Thu Mar 14, 2019 10:03 am
No matter what, you'll never get all of your rsu's. You can work till you die and you'll still leave some on the table.
You are wrong to assume this is how all RSU plans operate. My MegaCorp paid out 100% of unvested RSUs upon death of the in-service employee. They also paid out 100% remaining RSUs when retiring. Retiring was defined as age 50+ with at least 5 years service. Only way to lose RSUs was to get fired or quit. It was a generous plan.

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Re: Retiring Early and losing RSUs

Post by marcopolo » Thu Mar 14, 2019 11:37 am

ponyboy wrote:
Thu Mar 14, 2019 10:03 am
Ah, the RSU's. No matter what, you'll never get all of your rsu's. You can work till you die and you'll still leave some on the table. Corps know this. I would never factor in RSU's when taking a job. But people fall for it all the time.
Demonstrably false.
I think it is fairly common to vest outstanding options when someone is let go for other than cause.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: Retiring Early and losing RSUs

Post by MikeG62 » Thu Mar 14, 2019 11:42 am

KlangFool wrote:
Thu Mar 14, 2019 9:42 am
Mike1765 wrote:
Wed Mar 13, 2019 8:44 pm
I've worked at mega-corp for a few years and have a substantial amount of unvested RSUs. I plan to work there several more years and retire relatively early to spend more time with my SO and child, but giving up the RSUs will be hard.
Mike1765,

Don't count the chicken before the egg hatches. It is entirely possible in a few years that your mega-corp went bankrupt and the RSUs worth nothing.

KlangFool
It is also entirely possible that your employer gets acquired and all outstanding unvested options will vest upon the change in control (this is common practice in change in control situations). This happened to me and was the tripwire for me to early retire - not the money from the vesting, but the fact that the change in control resulted in the exodus of senior management (of which I was one). The vesting and severance were icing on the cake.

OP, I would assume your employer is not going to change the terms of "your" RSU's. They have a policy and I would expect them to follow it. Making exceptions has the potential to set a dangerous legal precedent (and could have accounting implications as well).
Real Knowledge Comes Only From Experience

btenny
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Re: Retiring Early and losing RSUs

Post by btenny » Thu Mar 14, 2019 12:13 pm

Mega Corp managers have been designing these "golden handcuff" programs for decades. They give you some benefits and RSUs but tie them to years of service and age and similar rules to prevent you from going to competitors. In our company the number was 85. This was in the 1980s and 1990s. Plus we had serious Non Compete contracts that made it hard to go to work anywhere else. I retired at 52 when my Mega offered a RIF package for senior people across the company. This was a surprise decision but my only chance of getting out in good financial shape. Plus my local big boss came close to making me sue then to get the package. He really did not want me to quit and take the RIF. And personnel made me sign a new 2 year non compete and wait for a year to get my RSUs.

So play the game and wait for a layoff. Maybe maneuver your job into a RIF eligible spot. And expect some restrictions. Or just quit and realize you will loose some money.

Good Luck.

Tamales
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Re: Retiring Early and losing RSUs

Post by Tamales » Thu Mar 14, 2019 12:30 pm

diy60 wrote:
Thu Mar 14, 2019 11:36 am
ponyboy wrote:
Thu Mar 14, 2019 10:03 am
No matter what, you'll never get all of your rsu's. You can work till you die and you'll still leave some on the table.
You are wrong to assume this is how all RSU plans operate. My MegaCorp paid out 100% of unvested RSUs upon death of the in-service employee. They also paid out 100% remaining RSUs when retiring. Retiring was defined as age 50+ with at least 5 years service. Only way to lose RSUs was to get fired or quit. It was a generous plan.
Yes, and once you meet the age + years of service threshold (sometimes, employers have more than 1 threshold, which affects how many forward-looking years of RSUs you get to keep even if you just quit rather than retire), you are subject to accelerated vesting of the RSUs per IRS rules.

Topic Author
Mike1765
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Re: Retiring Early and losing RSUs

Post by Mike1765 » Thu Mar 14, 2019 5:40 pm

Thanks again for all the replies: oddly it's very hard to google for any useful information on this topic, and this thread has been very helpful for me (and hopefully others). To be clear, my job and company (and manager) are great in many ways and I don't hate my job...it's just a high-stress role that I don't want forever.
  • "Performance firing is Cause."
Understood, but everyone I know in my industry who was let go for performance had their RSUs vest on schedule as long as they didn't move to a competitor. Except for people who violated a rule or law (e.g. stealing information) everyone I know who was fired kept their stock.
  • "Here's another option to consider: find another employer willing to buy you out of your RSUs in cash."
Certainly worth a look, but every employer I know will offer to swap old company RSUs for new company RSUs on same vesting schedule. Also any move to another company that would buy out my RSUs would be for a similar high-stress role, and since my buy out is expensive it would be hard to find a buy-out into an easy job.
  • "Are your RSUs a one time grant, or do you get replenished each year?"
Refreshed each year...that's why I'm thinking about this now even though I hope not to leave for a while.

My initial thoughts on this were that I just walk in one day, say I want to leave for personal reasons and not work again, and management would think it's weird but would let me keep my stock. But based on information I've gotten from here, it sounds like I'll need to negotiate something a bit more complex...either get lucky and be included in a layoff or negotiate a part-time transition and phase out over a year or two.

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beyou
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Re: Retiring Early and losing RSUs

Post by beyou » Thu Mar 14, 2019 5:48 pm

This thread almost makes it seem like luck to get laid off :-)

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GerryL
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Re: Retiring Early and losing RSUs

Post by GerryL » Thu Mar 14, 2019 6:02 pm

ponyboy wrote:
Thu Mar 14, 2019 10:03 am
Ah, the RSU's. No matter what, you'll never get all of your rsu's. You can work till you die and you'll still leave some on the table. Corps know this. I would never factor in RSU's when taking a job. But people fall for it all the time.
No. It depends on the rules at the company. I took a retirement package a year before I intended to retire. We had 3 different "rules" of retirement, which had different conditions for taking RSUs. I was eligible under all 3, including the one that qualified me for accelerated vesting of ALL my RSUs, including the ones that were granted just a couple of months prior. (I specifically chose my retirement month to be just after RSUs were routinely granted for this very reason. The only ones I "left on the table" were the RSUs I would have earned and been granted if I had stayed a year longer.)

I had researched (and re-visited) all these rules several years before the clock struck. One thing that perked me up years before was understanding that the rule of "age+years of service" clocked forward 2 years at a time!

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