A public listing supplies market liquidity, but employees can still face an initial six-month lockup, trading blackouts around earnings, and additional filings for senior executives. Those restrictions mean an employee cannot assume shares can be sold immediately whenever a preferred price appears.

Public markets make company shares easier to sell than private shares
Employees may face a six-month post-IPO lockup
Earnings releases create trading blackout periods
C-suite executives may need specific filings to avoid insider-trading concerns

“if they're publicly that's the easier of the two because there's liquidity when you need it.”
Joey Fishman · 08:24

“It's it's not that easy.”
Joey Fishman · 09:29

#ipo#lockup period#trading restrictions

Explainer· 4

Explainer01:36

The Three Equity Awards Employees See Most Often

Fishman identifies restricted stock units, non-qualified stock options, and incentive stock options as the most frequent forms of equity compensation. Incentive stock options are reserved for employees, while non-qualified options can also go to board members, consultants, and other non-employees participating in the firm.

Restricted stock units are the most common form Fishman sees
Non-qualified and incentive stock options follow RSUs in frequency
Incentive stock options are reserved for employees
Non-qualified options may be granted to consultants and board members

“The most comprehensive, the one that we see the most is restricted stock units, then followed by non qualified stock option its incentive stock options.”
Joey Fishman · 01:44

“incentive stock options are reserved only for employees”
Joey Fishman · 02:38

#equity compensation#stock options#rsus

Explainer04:09

How Industry and Company Maturity Shape Equity Awards

Fishman says the equity-and-cash mix is more art than science, with each company designing its own plan. His broad pattern is that oil and gas favors RSUs, financial firms use restricted stock awards and deferred compensation, and technology companies often begin with options before moving toward RSUs as they mature.

Each company develops its own version of an equity plan
Netflix lets employees direct compensation toward non-qualified options
Financial firms often pair restricted stock awards with deferred compensation
Technology companies tend to shift from options to RSUs as they mature

“It's more art than science, and so each company is going to have its own version of an equity stock plan.”
Joey Fishman · 04:25

“tech is very much reliant on options at the beginning, and then as the company grows and becomes more established and switches to RSUs.”
Joey Fishman · 05:19

#compensation design#industry trends#company maturity

Explainer05:27

Why Stock-Compensation Taxes Can Consume Half the Gain

Different award types create different routes to long-term capital-gains treatment and different failure modes. Fishman flags alternative minimum tax for some incentive-option holders and ordinary-income treatment for non-qualified options, illustrating how a large California gain can leave an employee with roughly half the headline amount.

Long-term capital-gains treatment requires satisfying award-specific conditions
Incentive stock options can expose employees to alternative minimum tax
Non-qualified options may be taxed at ordinary-income rates
Tax treatment can sharply reduce usable proceeds

“It's like playing a game of financial twister.”
Joey Fishman · 05:45

“if you're realizing a couple million dollars worth of non qualified stock options and you live in the state of California, at the end of…”
Joey Fishman · 06:40

#taxes#capital gains#stock options

Explainer07:04

What a Four-Year Vesting Schedule With a One-Year Cliff Means

A common employee schedule spans four years but releases nothing during the first twelve months. Once the employee crosses that one-year cliff, 25% vests, with the remaining equity vesting fractionally over the next 36 months.

The schedule commonly lasts four years
No shares vest during the first twelve months
Crossing the cliff releases the first 25%
The remainder vests over the following 36 months

“most work under a four year vesting schedule with a one year cliff”
Joey Fishman · 07:19

“After the cliff is met, the first twelve months is met, you then get twenty five percent of your shares.”
Joey Fishman · 07:39

#vesting#one-year cliff#employee stock

Q&A· 1

Q&A03:22

Why Employers Trade Some Cash Compensation for Equity

From the employer's perspective, equity can align employees with business growth and reduce friction with management by making staff active financial participants. The trade-off is administrative complexity, regulatory exposure, and the cost of complying with rules that vary by stock plan.

Equity gives employees a direct financial interest in growth
Participation can reduce friction between employees and management
Stock plans are complex to administer
Employers must spend on regulatory compliance

“Employees are incentivized to grow the business, you know, put their heads down and get after it with less friction between you know, management and…”
Joey Fishman · 03:35

“They are complex to administer. The regulatory environment is kind of a beast, and you do have to spend money on compliance”
Joey Fishman · 03:54

#employee incentives#company culture#compliance

Takeaway· 2

Takeaway10:47

The Biggest Equity-Compensation Mistakes Differ by Side

Fishman sees overconfidence and resistance to diversification among employees who have already benefited from company stock, while employers face regulatory and litigation hazards. Advisers and employers must also distinguish financial guidance from tax advice when communicating about complex awards.

Successful employees can display survivorship bias and overconfidence
Long attachment to a company can make diversification difficult
Strategic planning can expose the sequence of risks
Employers face compliance, litigation, and communication hazards

“On the employee side, over confidence tends to run rampant.”
Joey Fishman · 11:00

“let's a it's a landmine if you don't know what you're doing.”
Joey Fishman · 12:24

#overconfidence#regulation#financial advice

Takeaway13:56

Why Mature Companies Are Moving Toward RSUs

Fishman says technology and high-growth firms are shifting toward restricted stock units because they are easier to administer and understand than option structures involving AMT, margin elements, and multiple tax treatments. RSUs still vest over time and create taxes, but they deliver a specified set of shares whose value is determined at vesting.

RSUs are easier to administer than incentive and non-qualified options
A one-year cliff and four-year vesting schedule remain common
The trading price at vesting determines the award's value
The shift reflects a more mature approach to distributing equity compensation

“They are switching to RSUs, which are the easier of the equity comp forms to administer”
Joey Fishman · 14:06

“everyone's trying to find a way to simplify all this.”
Joey Fishman · 14:46

#rsus#tech companies#compensation trends

Frameworks in this episode

Private Equity Double-Trigger Model

Quality-of-Life De-Risking Rule

Insights & moments

⚡Myth Buster· 1

Public Company Stock Is Liquid but Not Always Sellable

✶Explainer· 4