How to use the stock option and rsu calculator
- Choose stock options or RSUs and enter the number of shares in the grant. For options, add the exercise price.
- Enter the share price today and, if you like, a second price to test such as a possible sale price.
- Enter the vesting period in months, the cliff and the months since the vesting start.
- Optionally enter a flat tax rate of your own. Read the vested shares, the value today and at the tested price, and the vesting table.
Formula
Vested shares = shares x months vested / vesting months, rounded down, and 0 before the cliff
Option value per share = share price - exercise price (never below 0)
RSU value per share = share price
Exercise cost = vested options x exercise price
Tax = value x the rate you enter
Vesting is assumed to be even by month after the cliff. The tax line appears only if you enter a rate, and it is a single flat percent with no other rules.
10,000 options with a $2 exercise price, 24 months into a 48 month schedule
With a 12 month cliff, 24 months of vesting means 10,000 x 24 / 48 = 5,000 vested options. At a share price of $10 the gain is $8 per option, so the vested options are worth $40,000 and the whole grant $80,000. Exercising the vested options costs 5,000 x $2 = $10,000.
At a tested price of $25 the vested value is 5,000 x $23 = $115,000. If you apply a 25% flat rate of your own to that, the tax is $28,750 and $86,250 remains. As RSUs with no exercise price, the same 5,000 vested shares at $10 would be worth $50,000.
Options and RSUs are different
An option gives you the right to buy shares at a fixed price, so its value is the gap between the share price and that price, and it is nothing if the share price is lower. An RSU is a promise of shares, so each vested unit is worth the share price. That is why RSUs keep some value even when a stock falls, while options can become worthless.
Compare equity with other parts of an offer in the job offer comparison calculator, and see how new rounds affect ownership in the equity dilution calculator.
Cliffs, taxes and what this tool does not know
A cliff means nothing vests until a set time, then the months so far vest at once. After that, shares vest evenly by month in this tool. Real plans may vest quarterly or yearly, so your plan documents control.
Tax treatment of options and RSUs depends on the type of grant, when you exercise or receive shares, how long you hold and other facts, so the tool only applies the flat rate you type. For gains on selling shares, see the capital gains calculator.
Assumptions and limits
- Share prices and the tested price are your inputs. For a private company the price is only an estimate and shares may not be sellable.
- Vesting is even by month after the cliff, with whole shares only.
- Taxes are not modeled beyond the flat rate you enter. The alternative minimum tax, withholding, option type, holding periods and early exercise are not included.
- Dilution, expiry, acceleration on a sale and company liquidity are not modeled. This is not tax or investment advice.
Frequently asked questions
How do I calculate how many options have vested?
Multiply the grant by the months vested and divide by the total vesting months, rounding down, after the cliff has passed. For 10,000 options 24 months into 48, that is 5,000.
What is a vesting cliff?
It is a waiting period before any shares vest. If the cliff is 12 months, you have nothing before month 12, and at month 12 a year's worth vests together.
What are my options worth if the price is below the exercise price?
Nothing at that price. You would not pay more than the share is worth to exercise, so the tool shows zero rather than a loss.
Does the calculator estimate taxes on equity?
No. It only applies the single flat rate you type, if any, because the tax rules for options and RSUs depend on facts the tool does not know.