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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

#81

Post by twblalock »

ericmay wrote: post #73
twblalock wrote: post #44

Earlier quoted context omitted.

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…

If they all wink wink do it at the same time then it doesn’t matter.

Yeah but they aren't. And they won't.

If there was collusion going on, compensation never would have skyrocketed over the past decade.

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

#82

Post by UncleMeat »

shabbatt wrote: post #13
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.

When they were printing money endlessly and rates were low, your strategy is sound. However, the house of cards is now crumbling and there is no end in sight to rate rises. My hedge fund manager friend for a private family office is saying we will see double digit rates by end of 2023. If you believe this then you know what to do. If not, you should at least think what such macro conditions would do to liquidity.

Is your hedge fund manager friend shorting bond funds like crazy? If not, why not?

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

#83

Post by turtlebits »

time_to_smile wrote: post #6
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.

> 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…

Tech base salaries are so high that it's easy to keep RSUs. Also, IME, within the last ~18+ years it's been extremely beneficial to hang onto them.

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

#84

Post by AYBABTME »

mabbo wrote: post #29
duxup wrote: post #27

Earlier quoted context omitted.

>don't want to have a large amount of my portfolio tied up in the company I work for. Just before the .com bust a company I worked for decided to remove the option for employees to just dump their 401k contributions into company stock, and removed the option to direct a massive % of their paycheck into the company stock purchase plan. (I believe some of these limits became law later on but at the time it was legal) S…

This is a large part of why I feel this way. I grew up near Ottawa, and had a lot of friends whose parents worked at Nortel. They were compensated with a lot of stock, which they held onto (it keeps rising, after all). Their pension plan was mostly invested in the company stock too. When the company fell apart (let's set aside whose fault that is- different topic), they lost their jobs, their savings, their pensions,…

It boggles my mind when people vest RSUs and just leave them there, hold onto their employers' stock and don't sell & diversify. The RSU vesting day is equivalent to having bought the stock on that day, there's no tax advantage to holding onto it. Whether at SHOP or at AMZN/MSFT/GOOG, why keep all your eggs in the same basket?

And yet the average person does exactly that.

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

#85

Post by gshulegaard »

spaceywilly wrote: post #61
kodah wrote: post #50

Earlier quoted context omitted.

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?

Not quite. In the short term, perhaps, but I think the original comment was alluding to the fact that RSUs as an "investment" vehicle can have long term returns far greater than others.

Put another way, 200k in RSUs at an early stage company might be worth 100x or even more at IPO or acquisition years down the line. If you were to take that same 200k in cash and invest it in other ways you might be able to have the same return, but it's unlikely.

There are a lot of factors that affect this, but ultimately the potential return is something that start up employees can find attractive. These potential returns are also the underpinning financial motivator for Venture Capital.

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

#86

Post by AYBABTME »

turtlebits wrote: post #83
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…

Tech base salaries are so high that it's easy to keep RSUs. Also, IME, within the last ~18+ years it's been extremely beneficial to hang onto them.

There's literally no advantage to hang onto them, versus selling them on vest day and reinvesting in a wide set of tech stocks (if that's what you want to invest into).

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

#87

Post by foobarian »

twblalock wrote: post #44
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…

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…

Should that be FAAG? Wasn't Netflix famously the one big tech co that paid all cash?

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

#88

Post by nemo44x »

shabbatt wrote: post #13
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.

When they were printing money endlessly and rates were low, your strategy is sound. However, the house of cards is now crumbling and there is no end in sight to rate rises. My hedge fund manager friend for a private family office is saying we will see double digit rates by end of 2023. If you believe this then you know what to do. If not, you should at least think what such macro conditions would do to liquidity.

Considering they’re pushing 75% in Argentina, 10% sounds like a deal.

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

#89

Post by JAlexoid »

modeless wrote: post #72
spaceywilly wrote: post #61

Earlier quoted context omitted.

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?

If you have RSUs worth 200k per year, standard practice is that you get one grant of 800k at the start of employment, vesting over four years. If you got 200k cash instead, you couldn't buy 800k stock in the first year. That's an extra 600k of upside exposure. If that 600k of extra stock appreciates a lot in the first few years, you are far better off with the RSU grant. If it doesn't, you can quit before it vests an…

That is highly dependent on if the stock appreciates.

I remember getting a stock grant at IBM in 2011.

Let alone, OP's example is you get all cash equivalent of the full stock grant... not vesting part.

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

#90

Post by saagarjha »

marcinzm wrote: post #80
spaceywilly wrote: post #61

Earlier quoted context omitted.

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?

I'll given an example. If you had $200k in yearly cash compensation from Apple starting in 2019 then you'd make $200k this year. If you had $200k in yearly RSU compensation from Apple starting in 2019 then you'd make $800k this year.

If you had $200k in yearly TWTR you’d make $100k this year. Things don’t always go up.
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