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

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

#61

Post by spaceywilly »

kodah wrote: post #50
pastor_bob wrote: post #43

Earlier quoted context omitted.

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 util…

If your company had offered you the cash value of RSUs instead of the RSUs, would you not have ended up in the same position financially? For example, if your base pay was 200k, and you had a grant of RSUs worth 200k, how is that better financially than getting all 400k in cash?

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

#62

Post by cma »

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.

Dirty secret is at somewhere the size of Spotify no normal employee is going to move the stock price on their own to any extent, so these incentivization things even if they were aligned to increasing when the price increases only could incentivize positive behavior towards increasing the stock price if the employee didn't understand tragedy of the commons or something.

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

#63

Post by [deleted] »

mjr00 wrote: post #45
boringg wrote: post #33

Earlier quoted context omitted.

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 loo…

[deleted]

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

#64

Post by neon_electro »

echelon wrote: post #48
paxys wrote: post #35

Earlier quoted context omitted.

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.

Not when the best the nimble upstarts are offering in positions where equity is on the table are options, not shares.

I’m all for more employee ownership and engagement from being a shareholder in addition to an employee, but I’d love to see startups equally interested in that.

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

#65

Post by jacques_chester »

Vvector wrote: post #47
londons_explore wrote: post #34

Earlier quoted context omitted.

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.

This is not my understanding at all. Share compensation is considered an expense because it reduces the value of the shares held by other shareholders.

It's advantageous for cashflow but neutral vs cash on the income statement.

Disclaimer: I am not an accountant, this is not financial or accounting advice.

Disclosure: I work for Shopify, but this should not be taken as a statement about Shopify's accounting or financial practice.

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

#66

Post by JAlexoid »

LudwigNagasena wrote: post #53
echelon wrote: post #48

Earlier quoted context omitted.

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.

The choice depends on your risk tolerance/aversion.

With larger companies stock grants are of little value to gain.

I joined GrubHub 3 months before the stock tanked. I haven't even vested the first tranche, before my RSUs tanked over 2x.

Thank god I learned enough in my life, to demand cash sign on bonus... that ended up being larger than the RSU grant.

Remember the golden rule - $1k today, is better than possible $10k in 4 years. (feel free to scale it up as you wish)

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

#67

Post by jacques_chester »

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.

"Every time I've traded cash for winning lotto tickets it's worked out for me in spades in the long run."

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

#68

Post by zibby8 »

mjr00 wrote: post #45
boringg wrote: post #33

Earlier quoted context omitted.

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 loo…

But did the bubble already burst in tech? Valuations are very low right now. I don't think we're necessarily at the bottom yet, but I think the worst has already come to pass.

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

#69

Post by jacques_chester »

rahimnathwani wrote: post #7
time_to_smile wrote: post #6

Earlier quoted context omitted.

> it's terribly illiquid I'm amazed at how many people that get a significant portion of their comp as RSUs hang on to their shares after vesting. During this insane bull market it's happened to work out, but having your income and a major portion (for most tech workers) of your assets perfectly correlated is absolutely a bad investment idea, not to mention the fact that you can only trade during approved windows and…

Endowment effect.

Or simulation heuristic: https://en.wikipedia.org/wiki/Simulation_heuristic

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

#70

Post by neon_electro »

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.

My data point is the opposite, the one time I accepted equity in the form of options, stayed 4 years to vest it all, and got lucky where the company was acquired, the payout before taxes was worth less than if I had simply negotiated an additional $10k before taxes on my salary.

I’m not optimistic for future employers offering me equity actually worth more than cash over the 4 years it takes to vest.

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