He wasn’t paid that amount. He got 341,000 in cash and the rest was in stocks and options (which will only be worth that much if the company performs well financially).
This us place is just like Reddit, nobody ever reads the article.
Still not how that works, if he wants cash he has to sell, selling stocks is heavily taxed. Now he can take a loan against the stocks but if they don’t do well then he’s not going to get much for them. It’s a risk and taxes is paid like it or not.
Still a shit system, but that’s a different discussion, but they pay taxes.
I wouldn’t say heavily taxed. If he exercised his options more than 6 months ago he’ll pay the flat 15% capital gains tax. Whereas his effective tax rate on his salary will be around 30%
I have read that that’s one of the wealthy’s “big secret” ways to avoid taxes. They allegedly live off of those loans as their spending money, while the value of the investments they use as collateral increases over time, but they don’t pay taxes on the Unrealized gains. And they can keep borrowing more as needed with those same investments as collateral.
I don’t have the whole scam figured out though. I’m not sure how they pay back the loans without having to cash out something that would generate a tax burden.
I’m assuming s long s they spread out payments over time and roll lots of the debt into the next loan.
That’s how they become too big to fail at their banks. At least that’s the Donald Trump method. His problem is that he has fuck all for collateral at this point.
Another thing to avoid taxes is donating stock to charities, as you can deduct the market value of the stock rather than just the cost basis.
Say you buy some stock for $100 and it goes up in value to $400. If you sell it, you have to pay capital gains tax on the $300 gain.
However, if you donate it, you don’t have to pay any tax and can deduct the whole $400, meaning your taxable income is reduced by $400 (which would be a ~$120 reduction in income tax for someone with a 30% effective tax rate).
Of course, you still end up with less money than you would have if you didn’t donate. But if you’re going to donate anyways, donating stock with gains is better than donating cash because you’ve already paid income tax on the cash but haven’t paid any tax on the stock gains.
It’s taxed as income when you receive it. If you hold onto it for over a year then sell it you pay capital gains (which are lower) on the difference between the grant price and current price (if it went up).
This place is also just like reddit in that comments like yours seeking to seem smarter than everyone else by pointing out technicalities in the article as evidence everyone has the wrong idea, without appreciating the full context, and deliberately ignoring the overall point.
Executives paid in stocks and options are completely normal, and those stock options have a value. Moreover, those things were not given to other employees nearly as much as they were given to the CEO.
The actual dollar amount he receives from Reddit is not what matters. What matters is the amount of compensation given to him in comparison to everyone else at Reddit and to other CEOs at other companies, especially when taking his performance into account.
The point is Reddit is effectively giving way too much of its value to one person who has done little to actually make it profitable in all the time he’s been there while routinely making mistakes and allowing scandals that have hurt Reddit’s reputation.
But also Tim Cook’s total compensation for 2022 was $99 million and Satya Nadella’s 2023 was $48 million. Paying him more than CEOs of actually profitable companies and what amounts to nearly 1/4 of revenue is a pretty big outlier.
Arw you suggesting that reddit shares are going to be worth a lot of money? I see a an 18 year old company that still can’t turn a profit, so I don’t exactly see how the IPO can be a success.
He wasn’t paid that amount. He got 341,000 in cash and the rest was in stocks and options (which will only be worth that much if the company performs well financially). This us place is just like Reddit, nobody ever reads the article.
It doesn’t really need to perform well financially. He can sell everything as soon as it goes public and retire
But they never do that. Musk could have been supping margaritas on a man made island with oompa loompas in a private ocean a long time ago
Oompa-loompas are extinct. He needs enough money to clone them from mosquitos trapped in amber.
Butterscotch.
He will still be in control of that wealth. It really shouldn’t be treated different from salary compensation
Unable to delete so editing instead. Leaving Lemmy.world due to privacy concerns.
Still not how that works, if he wants cash he has to sell, selling stocks is heavily taxed. Now he can take a loan against the stocks but if they don’t do well then he’s not going to get much for them. It’s a risk and taxes is paid like it or not.
Still a shit system, but that’s a different discussion, but they pay taxes.
I wouldn’t say heavily taxed. If he exercised his options more than 6 months ago he’ll pay the flat 15% capital gains tax. Whereas his effective tax rate on his salary will be around 30%
Yeah and he can also use the stocks as collateral on a loan and avoid them all together.
I have read that that’s one of the wealthy’s “big secret” ways to avoid taxes. They allegedly live off of those loans as their spending money, while the value of the investments they use as collateral increases over time, but they don’t pay taxes on the Unrealized gains. And they can keep borrowing more as needed with those same investments as collateral.
I don’t have the whole scam figured out though. I’m not sure how they pay back the loans without having to cash out something that would generate a tax burden.
I’m assuming s long s they spread out payments over time and roll lots of the debt into the next loan.
That’s how they become too big to fail at their banks. At least that’s the Donald Trump method. His problem is that he has fuck all for collateral at this point.
lol just default the loan and let them take the collateral, you have thr money already tax free
Another thing to avoid taxes is donating stock to charities, as you can deduct the market value of the stock rather than just the cost basis.
Say you buy some stock for $100 and it goes up in value to $400. If you sell it, you have to pay capital gains tax on the $300 gain.
However, if you donate it, you don’t have to pay any tax and can deduct the whole $400, meaning your taxable income is reduced by $400 (which would be a ~$120 reduction in income tax for someone with a 30% effective tax rate).
Of course, you still end up with less money than you would have if you didn’t donate. But if you’re going to donate anyways, donating stock with gains is better than donating cash because you’ve already paid income tax on the cash but haven’t paid any tax on the stock gains.
I wonder if you can pay off loans by transferring the stock. Idk, just a thought
If he waits for longer than a year, short term under a year is taxed at normal income rates.
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It’s taxed as income when you receive it. If you hold onto it for over a year then sell it you pay capital gains (which are lower) on the difference between the grant price and current price (if it went up).
The interest rate on taking loans against assets is usually less than paying the taxes for selling the same assets
Unable to delete so editing instead. Leaving Lemmy.world due to privacy concerns.
If they sell after holding it for more than a year, if they short term sell the stock under a year it’s a normal income tax on said stock.
Unable to delete so editing instead. Leaving Lemmy.world due to privacy concerns.
I’m not disagreeing with you, I think it’s a shit system as well, I’m just pointing out what a lot of people seem to think is 0 taxes on stocks.
They can take out loans with the stocks as collateral. The money received from loans isn’t taxable.
That still requires you to make sure the stock are worth something, and you have to pay interest on that loan.
I think people are thinking I’m defending the system, I’m not, I’m just pointing out how it works.
This place is also just like reddit in that comments like yours seeking to seem smarter than everyone else by pointing out technicalities in the article as evidence everyone has the wrong idea, without appreciating the full context, and deliberately ignoring the overall point.
Executives paid in stocks and options are completely normal, and those stock options have a value. Moreover, those things were not given to other employees nearly as much as they were given to the CEO.
The actual dollar amount he receives from Reddit is not what matters. What matters is the amount of compensation given to him in comparison to everyone else at Reddit and to other CEOs at other companies, especially when taking his performance into account.
The point is Reddit is effectively giving way too much of its value to one person who has done little to actually make it profitable in all the time he’s been there while routinely making mistakes and allowing scandals that have hurt Reddit’s reputation.
The context is important since it informs us about why he’s doing this, which is probably to further inflate his stock value
But also Tim Cook’s total compensation for 2022 was $99 million and Satya Nadella’s 2023 was $48 million. Paying him more than CEOs of actually profitable companies and what amounts to nearly 1/4 of revenue is a pretty big outlier.
Steve Jobs was wealthy despite having a salary of $1 per year.
Arw you suggesting that reddit shares are going to be worth a lot of money? I see a an 18 year old company that still can’t turn a profit, so I don’t exactly see how the IPO can be a success.