You get a small free option if job change costs are zero. Unvested equity can appreciate. The option is only really free if you can change jobs effortlessly if it depreciates, but that's close enough to true if you're motivated enough.

Note that this is still catastrophic in terms of diversification. And you can compare job change costs directly to how much paying for this option would cost.

It's a matter of the difference between when they are granted versus when you receive them. If I tell you I'm going to give you $100k cash in 4 years, that's wildly different from if I tell you that in 4 years I'm going to give you stock purchased at today's price for $100k. Yes, the upside relies on the stock going up, but that upside can change things quite a bit.

This makes sense, thank you

It can be preferable because RSU's typically have a basis that reflects the price of the stock at the time they're granted. So if you're granted $100k in RSU's per year at year 0, and the price of the stock doubles by year 1, you'll actually receive $200k worth of stock.

And when it halves (like it happened to most tech stock over the last year) you get $50K by year 1. If that doubles you finally get your 100K again by year 2.

I think the point is that RSUs are preferable if the stock goes up, and cash is preferable if the stock goes down. If the stock stays flat, there is no difference between RSU/cash split.

I think most people's assumption that the market will go up over time so most people would prefer RSUs. How accurate that assumption is in the short-medium term remains to be seen.

To be more general, RSUs are preferable if the stock goes up higher relative to other investments that the grantee could have picked, and cash is preferable if the stock performs worse than other investments that the grantee could have picked. For example, if the stock rises but performs worse than an index fund, then the grantee would have been better served to have gotten cash and put it into a no-effort index fund. If the grantee has an aptitude for stock picking, the balance sways even more towards cash being preferable.

Not true, because the cash would be distributed over time (as increased salary or bonus) as well, not a lump sum up front available for investment.

Still true if the investment made with the cash distributed over time performs better than the RSUs granted lump sum up front.

And yet if you look at most tech stocks that "halved" this year (which, btw, is an overstatement for most), they're still up from 2 years ago. My company's stock is down 25% but my RSUs that vested this year were still worth a hell of a lot more than when they were granted 2,3, or 4 years ago.