Shopify lets staff decide cash-stock pay mix as shares dive • Hacker News Board

Re: Shopify lets staff decide cash-stock pay mix as shares dive

#41

Post by ryanisnan » Fri, Sep 16, 2022, 3:19 PM UTC

paxys wrote: post #35

tensor wrote: post #28

One crucial thing not often talked about with this plan is that the stock is granted and vests quarterly . In fact, the amount of stock you get each quarter is also variable. E.g. if you choose to have 100k of equity each year, each quarter you get whatever amount of units equates to 25k of stock. So what they've done is nearly completely untie compensation from the stock price. You neither benefit significantly nor…

This is becoming more and more common at large tech companies. Stripe does the same thing. Over the last decade and a half tech employees have enjoyed massive returns due to stock appreciation during their vesting term, and now employers want to eliminate that. Of course the flip side is that when the stock goes down - like right now - then employees benefit. Ultimately they’re all going to cut out stocks entirely an…

If I'm an employee earning equity vs cash, I damn well want to make sure my incentives are aligned with the companies, e.g. the value increasing. This seems a bit perverse.

Re: Shopify lets staff decide cash-stock pay mix as shares dive

#42

Post by LudwigNagasena » Fri, Sep 16, 2022, 3:21 PM UTC

tensor wrote: post #28

One crucial thing not often talked about with this plan is that the stock is granted and vests quarterly . In fact, the amount of stock you get each quarter is also variable. E.g. if you choose to have 100k of equity each year, each quarter you get whatever amount of units equates to 25k of stock. So what they've done is nearly completely untie compensation from the stock price. You neither benefit significantly nor…

What is even the point? Some of sort tax benefits?

Re: Shopify lets staff decide cash-stock pay mix as shares dive

#43

Post by pastor_bob » Fri, Sep 16, 2022, 3:21 PM UTC

modeless wrote: post #37

tensor wrote: post #28

One crucial thing not often talked about with this plan is that the stock is granted and vests quarterly . In fact, the amount of stock you get each quarter is also variable. E.g. if you choose to have 100k of equity each year, each quarter you get whatever amount of units equates to 25k of stock. So what they've done is nearly completely untie compensation from the stock price. You neither benefit significantly nor…

So it's not an equity grant at all then. It's an employee stock purchase plan. You choose how much of your compensation buys stock and you get a small discount on the purchase price (called "bonus" in the article). That is exactly an ESPP.

Yes, to me this basically sounds like ESPP without the discount

Re: Shopify lets staff decide cash-stock pay mix as shares dive

#44

Post by twblalock » Fri, Sep 16, 2022, 3:23 PM UTC

paxys wrote: post #35

tensor wrote: post #28

One crucial thing not often talked about with this plan is that the stock is granted and vests quarterly . In fact, the amount of stock you get each quarter is also variable. E.g. if you choose to have 100k of equity each year, each quarter you get whatever amount of units equates to 25k of stock. So what they've done is nearly completely untie compensation from the stock price. You neither benefit significantly nor…

This is becoming more and more common at large tech companies. Stripe does the same thing. Over the last decade and a half tech employees have enjoyed massive returns due to stock appreciation during their vesting term, and now employers want to eliminate that. Of course the flip side is that when the stock goes down - like right now - then employees benefit. Ultimately they’re all going to cut out stocks entirely an…

Why on earth would employers want to eliminate those massive returns? That's been an amazing tool for employee retention, especially for FAANG. If they reverted to paying cash plus bonus, they would be less competitive when hiring and retaining people.

The companies that are changing this are the ones whose stock tanked, and they are worried that employees will leave because of it. Companies whose stock did not tank are retaining their normal compensation programs.

Re: Shopify lets staff decide cash-stock pay mix as shares dive

#45

Post by mjr00 » Fri, Sep 16, 2022, 3:24 PM UTC

boringg wrote: post #33

mmastrac wrote: post #2

I obviously don't want to give financial advice, but every time I've traded cash for stock in comp it's worked out for me in spades in the long run. This doesn't happen for everyone, it might not happen for you, but it's been very good to me on three separate occasions. Just remember that it's terribly illiquid and you're going to doubt your decision, potentially up to a decade later.

If you did this at any time in the last 10 years you were probably rewarded handsomely. However the macro environment has significantly changed and I don't think your past behavior would be predictive of future performance.

For the tech sector it's really been more like the last 22 years. There hasn't been an extended downturn in US tech stock since the original dot-com bubble. The 2008 recession ended up being a 1-2 year blip. The COVID contraction was extremely brief. By comparison, if you invested in the NASDAQ in 1999/2000, you'd need to wait 12-14 years to break even.

I don't have a crystal ball, of course, but to me things are looking a lot closer to 2000 than 2008.

Re: Shopify lets staff decide cash-stock pay mix as shares dive

#46

Post by jxf » Fri, Sep 16, 2022, 3:24 PM UTC

knodi123 wrote: post #40

tensor wrote: post #28

One crucial thing not often talked about with this plan is that the stock is granted and vests quarterly . In fact, the amount of stock you get each quarter is also variable. E.g. if you choose to have 100k of equity each year, each quarter you get whatever amount of units equates to 25k of stock. So what they've done is nearly completely untie compensation from the stock price. You neither benefit significantly nor…

> So what they've done is nearly completely untie compensation from the stock price. But it IS tied to the change in price- right?

No. Your total compensation is fixed. You're deciding how much of it goes to stock (as opposed to your _grant size_ being fixed).

Re: Shopify lets staff decide cash-stock pay mix as shares dive

#47

Post by Vvector » Fri, Sep 16, 2022, 3:24 PM UTC

londons_explore wrote: post #34

tensor wrote: post #28

One crucial thing not often talked about with this plan is that the stock is granted and vests quarterly . In fact, the amount of stock you get each quarter is also variable. E.g. if you choose to have 100k of equity each year, each quarter you get whatever amount of units equates to 25k of stock. So what they've done is nearly completely untie compensation from the stock price. You neither benefit significantly nor…

So how is it different than just paying the employee cash and recommending that they buy shopify stock? Is it just a user friction thing?

Stock Grants are not an "expense" under Generally Accepted Accounting Principles. So by paying in stock, instead of salary, it increases profits on paper. It does help with cash flow and other tangible benefits.

Most employees would be wise to divest much of their company stock as soon as they are allowed. Don't have all your eggs in one basket.

Re: Shopify lets staff decide cash-stock pay mix as shares dive

#48

Post by echelon » Fri, Sep 16, 2022, 3:24 PM UTC

paxys wrote: post #35

tensor wrote: post #28

One crucial thing not often talked about with this plan is that the stock is granted and vests quarterly . In fact, the amount of stock you get each quarter is also variable. E.g. if you choose to have 100k of equity each year, each quarter you get whatever amount of units equates to 25k of stock. So what they've done is nearly completely untie compensation from the stock price. You neither benefit significantly nor…

This is becoming more and more common at large tech companies. Stripe does the same thing. Over the last decade and a half tech employees have enjoyed massive returns due to stock appreciation during their vesting term, and now employers want to eliminate that. Of course the flip side is that when the stock goes down - like right now - then employees benefit. Ultimately they’re all going to cut out stocks entirely an…

Startups will offer stock and win.

If tech workers were united in fleeing giants to found or work at nimble upstarts, we would reap nearly all of the rewards.

Re: Shopify lets staff decide cash-stock pay mix as shares dive

#49

Post by gpderetta » Fri, Sep 16, 2022, 3:26 PM UTC

paxys wrote: post #35

tensor wrote: post #28

One crucial thing not often talked about with this plan is that the stock is granted and vests quarterly . In fact, the amount of stock you get each quarter is also variable. E.g. if you choose to have 100k of equity each year, each quarter you get whatever amount of units equates to 25k of stock. So what they've done is nearly completely untie compensation from the stock price. You neither benefit significantly nor…

This is becoming more and more common at large tech companies. Stripe does the same thing. Over the last decade and a half tech employees have enjoyed massive returns due to stock appreciation during their vesting term, and now employers want to eliminate that. Of course the flip side is that when the stock goes down - like right now - then employees benefit. Ultimately they’re all going to cut out stocks entirely an…

But as long as the cash bonus has the same nominal value as the stock grant there is not much of a downside for the employee as in the worst case they can just buy the stock on the market (which should be possible for a large tech company).

Re: Shopify lets staff decide cash-stock pay mix as shares dive

#50

Post by kodah » Fri, Sep 16, 2022, 3:27 PM UTC

pastor_bob wrote: post #43

modeless wrote: post #37

Earlier quoted context omitted.

So it's not an equity grant at all then. It's an employee stock purchase plan. You choose how much of your compensation buys stock and you get a small discount on the purchase price (called "bonus" in the article). That is exactly an ESPP.

Yes, to me this basically sounds like ESPP without the discount

This is how my ESPP works. I couldn't imagine that program replacing my RSUs. What a ripoff to the people attracted by the promise of RSUs.

As someone who came into tech with $0 in savings, RSUs are what gave me financial freedom. When a business dilutes that they not only dilute the marginal amount of business that employees get back in return for their contributions but it also takes away another key financial utility for people to rise economically.