Understanding Netflix Equity Compensation: Stock Options, RSUs, and PSUs
If you work at Netflix, your paycheck may be just one part of your overall compensation. Like many leading tech and entertainment companies, Netflix offers equity compensation as a way for employees to share in the company’s success.
At Evermont Wealth, we help Netflix professionals understand and maximize their equity benefits, manage taxes, and achieve their financial goals. Here are tips to help you understand and make the most of your compensation.
How Netflix Equity Compensation Works
Netflix has long been known for doing things differently, and that extends to how it pays its employees.
Stock Options for Most Employees
Rather than relying solely on restricted stock units (RSUs) like many other companies, most Netflix employees receive stock options as part of their annual pay.
Each year, Netflix allows employees to choose the mix of salary and stock options that makes sense for their situation. This flexibility means you can balance current income needs with long-term opportunities in company stock. The right mix depends on your goals, risk tolerance, and overall financial picture.
For the majority of Netflix team members, stock options are the main form of equity compensation. These options come with several unique features:
Fully vested at grant. You don’t need to wait years for vesting.
Portable when you leave. You keep your options even if you move on.
10-year exercise period. You have up to a decade to decide when to exercise.
This flexibility is rare in corporate compensation plans, but it also adds complexity. Because you control when to exercise, timing and tax planning are essential.
Exercising earlier can reduce future tax exposure if the share price rises, while waiting may preserve cash but could increase future taxes. Every decision should fit within your broader financial strategy.
When you exercise your options, you buy shares at the set “strike” price. If Netflix’s market price is higher at that point, the difference counts as taxable income, and you’ll owe tax even if you keep the shares.
RSUs and PSUs for Executives
Netflix grants restricted stock units (RSUs) and performance stock units (PSUs) to members of its senior leadership team.
RSUs provide actual shares that vest over time, based on continued employment.
PSUs add a performance component, vesting only if company goals or stock targets are met.
While most employees still receive stock options, understanding these other forms of equity can help you recognize how compensation structures evolve as roles change or as the company updates its policies.
Planning Around Netflix Equity Compensation
Whether your compensation comes in the form of stock options, RSUs, or PSUs, your equity can become one of the most valuable parts of your financial life when managed strategically.
Here are some key planning principles:
1. Plan for taxes in advance.
Equity events, like exercising options or vesting RSUs, often trigger taxable income. Working with a fiduciary financial planner and tax professional can help you project and manage the impact.
2. Avoid overconcentration.
Netflix employees can build significant wealth in company stock, but holding too much in one company increases risk. Diversifying helps protect your long-term financial stability.
3. Align your equity with your life goals.
Equity isn’t just a bonus; it’s part of your overall financial plan. Whether your priorities include retirement, a home purchase, or early financial independence, planning when to exercise or sell can help you meet those goals.
4. Revisit your plan regularly.
Netflix’s compensation programs and your personal circumstances can both change over time. Annual check-ins can help you feel confident that your strategy remains aligned with new grants, market shifts, or life events.
Working with a Fee-Only Advisor Who Understands Netflix Compensation
At Evermont Wealth, we help Netflix employees turn complex equity programs into actionable financial strategies.
As a fee-only, fiduciary Registered Investment Advisor (RIA), we operate independently and transparently, with advice that puts your interests first.
We help Netflix employees:
Plan when and how to exercise stock options
Manage taxes on RSUs and PSUs
Diversify investment portfolios
Integrate Netflix equity into comprehensive retirement and wealth strategies
Evermont Wealth serves clients throughout Southern California and beyond, both virtually and in person from our Claremont office.
We invite you to schedule a short, no-obligation conversation with one of our advisors. Schedule a free consultation today.
This material was written in collaboration with artificial intelligence (ChatGPT) derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.