Assume I get a US$4k grant with 1/4th vesting every year, there are two options:
1. I get RSUs worth US$1k in the first year, then the stock triples in price. I would then get US$3k worth of stock in the second year. I essentially get more money when my stock units vest.
2. I will always get the same dollar value of RSUs every year. This would mean I would get US$1k in stock every year, no matter how the stock performs.
Is 1. or 2. the "normal" method of granting stock? I just had two arguments with a friend and my dad, each completely convinced that 1 or 2 is the standard way stock grants work.
Normally, you'll get an initial grant when you join. The size of this grant will be decided based on its dollar value at the time of issue (ie scenario 1).
The grant will then vest on a schedule over the next 3-4 years, and the proceeds you earn depend on the price at which you sell your stock when it vests.
If you perform well and the company wants to keep you around, they may issue a refresher every year. This is where they issue you with additional RSUs on top of what you have, and this stock has its own vesting schedule; sometimes part of it will vest immediately, so in that case it will be like scenario 2.
The size of your refresher will also be determined by its value at the time of issue.