Stock & Equity
Why did I receive this number of RSU shares?
Your RSU grant is calculated from your Total Compensation Target (TCT): shares = (TCT - base salary) / planning price. For example, if your TCT is $300,000, your base is $200,000, and the planning price is $200, you'd receive ($300,000 - $200,000) / $200 = 500 shares. The planning price is set by the company at the start of the compensation cycle, not the market price at the time of grant.
What is the planning price?
The planning price is the 30-day trailing moving average of the company's stock price in March of the current year. It is used to convert the equity portion of your TCT into a share count. If the market price is higher than the planning price when your shares vest, your actual realized compensation will exceed your TCT. If it's lower, you'll realize less. The calculator uses the planning price by default; if you enter shares x current market price instead, your result may land above or below the expected pay band.
What is the RSU vesting schedule?
For most employees, the standard new-hire RSU grant vests on a backloaded schedule: 5% in year 1, 15% in year 2, 40% in year 3, and 40% in year 4. This means realized compensation in years 1 and 2 will be significantly lower than your TCT. Annual refresh grants (issued each PCS cycle) typically vest in equal installments over 2 years. Over time, as multiple grants overlap, your total annual vesting normalizes toward your TCT.
My total compensation is above the top of my pay band: what does that mean?
This typically indicates stock appreciation. Pay bands are calculated using the planning price set before the fiscal year. If the stock has risen significantly since then, the market value of your vesting shares will exceed what was projected when setting your TCT. This isn't a sign of an error; it means the market moved in your favor. If you entered shares x current market price, try switching to the planning price for a more accurate OV comparison.
Scenario: four years of realized compensation for a new hire
Alex joins with a pay band of $250,000-$300,000 and a base salary of $175,000. The planning price is $200 per share and the annual equity target is $100,000. The company grants 2,000 shares total on the backloaded schedule: 100 in year 1, 300 in year 2, 800 in year 3, 800 in year 4. Assume Alex never receives any new RSU grants. The same four years are shown at the company's planned 15% annual stock growth versus actual 25% growth. Year 1: 100 RSU grants. Cash bonus: $80,000. TC with 15% growth: $175,000 (base) + $80,000 (cash bonus) + $230 * 100 (RSU) = $278,000 TC with 25% growth: $175,000 (base) + $80,000 (cash bonus) + $250 * 100 (RSU) = $280,000 Year 2: 300 RSU grants. Cash bonus: $40,000. TC with 15% growth: $175,000 (base) + $40,000 (cash bonus) + $264.50 * 300 (RSU) = $294,350 TC with 25% growth: $175,000 (base) + $40,000 (cash bonus) + $312.50 * 300 (RSU) = $308,750 Year 3: 800 RSU grants. No cash bonus. TC with 15% growth: $175,000 (base) + $304 * 800 (RSU) = $418,200 TC with 25% growth: $175,000 (base) + $390 * 800 (RSU) = $487,000 Year 4: 800 RSU grants. No cash bonus. TC with 15% growth: $175,000 (base) + $350 * 800 (RSU) = $455,000 TC with 25% growth: $175,000 (base) + $488 * 800 (RSU) = $565,400 At planned growth, total comp peaks at $455,000 by year 4. At 25% growth, it reaches $565,400. In both cases, the heavy vesting in years 3 and 4 pushes comp well above the pay band top of $300,000.
My total compensation is below the bottom of my pay band: what does that mean?
There are three common reasons this happens. 1/ The stock dropped. Your RSU grant was sized using the planning price set before the fiscal year. If the stock has fallen since then, the shares you vest are worth less than projected. Your pay band and your TCT are both anchored to the planning price, but your actual realized comp reflects the lower market price. 2/ You were recently promoted. When you move to a new level your pay band shifts up immediately, but your existing RSU grants were sized for your previous level. Those grants continue vesting at the old share count for up to two more years, which can make your realized comp look low relative to the new band. On top of that, most employees receive an automatic HV1 rating in the first PCS cycle after a promotion, which means little to no new RSU refresh grant that year. The combination of old grants vesting below the new band and a minimal refresh grant can leave realized comp well below the new TCT for 1-2 cycles. 3/ You are a new hire in year 1 or 2. The standard vesting schedule is backloaded: 5% of your grant vests in year 1 and 15% in year 2. Even if your offer letter stated a $300,000 TCT, you will only see a fraction of that equity in the early years. Your realized comp will naturally sit below the band bottom until years 3 and 4, when the 40%/40% vesting kicks in.
Scenario: how the pay cliff works
Continuing from the 15% growth scenario: the initial 4-year grant pushes TC to $418,200 in year 3 and $455,000 in year 4. Because realized comp is already well above the band, the company issues no new RSU for year 4 in either cycle. Instead, grants are sized to land year 5 at the HV2 target of $275,000. Year 3: TC = $418,200 from initial grant. New grant: 50 shares at planning price $350, vesting in year 5 only. Year 4: TC = $455,000 from initial grant. New grant: 200 shares vesting in year 5 and 50 shares vesting in year 6, at planning price $400. Year 5: 50 shares from the year 3 grant and 200 shares from the year 4. Stock has grown to $460. TC: $175,000 (base) + 250 * $460 (RSU) = $290,000 TC drops from $455,000 in year 4 to $290,000 in year 5, even with a 15% stock growth. The initial grant is done and the refresh grants take over at the intended HV2 level.