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

Many of the companies that are doing this are near-IPO or post-IPO trying to make their finances better. With GAAP, IIUC RSUs are recorded as expenses/count against shareholder equity at the vested price. So if you are a company trying to become GAAP profitable, even if you don’t claw back old appreciated grants, you can prevent the problem going forward/appease shareholders concerned about the impact on GAAP profitability by preventing appreciation. A long-dated RSU is a liability that can become expensive.

Also personally I think getting highly appreciated RSU comp can introduce incentives like employees staying at a company longer than they should or want to (ie because they are burnt out or disengaged) since it may not be possible to find another job that compensates you nearly as much. And, it creates very large pay gaps - an entry level employee who joined 2 years ago may be making more than a staff level employee hired recently.

I think RSUs are amazing for employees and the vesting/expected refresher details are a very important thing I look at when evaluating working somewhere. But many other people probably just look at the Year1 TC which doesn’t include appreciation or refreshers at all. I think enough people are like me that traditional RSUs won’t disappear any time soon, but I expect more companies to try to see what they can get away with in reducing equity comp.

Like Nikola is down 94%, but it's still worth $3 billion on paper. This is for an electric vehicle company that staged a video of one of their vehicles being driven, only for us to learn in a fraud trial that it was rolling down a hill, with the excuse that they never claimed the vehicle was moving under its own power, just that it was "in motion." The company is worth nothing at the moment; any "worth" it currently has is a speculative bet that it will eventually produce something of value.

We need to start seeing the GOOG, META, AMZN, etc. stocks tank 80% before we can compare to the dotcom bubble, IMO.

GAAP are what they are.

First year make 400k, buy 200k worth of something that is not just one egg basket. But because it's salary you do that every ~2 weeks so you end up with hopefully more than 200k by end of year already too. Continue example over the other 3 years.

Yes the upside is smaller as I would assume the broader market part would return less in the upside case. The point is that your downside is 'better'. Instead of your tech stock tanking over proportionally you'd be down less or be even or could decide to stay in cash mid year as markets tank and interest rises or buy something else like a house. It basically allows for better 'control' and a less bad worst case at the cost of being able to 'win the lottery'.

Of course you are right that just buying one stock, even if not your own company from the cash is actually worse overall. If you were gonna do that, just get the RSUs.

Not entirely, they've created a relationship, but it is the opposite of what is normally considered in "line goes up" thinking.

Usually when a company/market does poorly, people don't have a strong reason to stick around as the possible compensation dwindles down.

The stock price on your joining date somewhat controls how many stock items you get. This is mostly luck - your "birth" into the company controls the payout multiple for the next 4 years.

Once the company starts doing poorly, it struggles to justify handing out extra compensation to employees and even if a select few are handed out more stock, it is usually not enough to keep a majority of folks in the building.

So with standard RSU models it'd be a good idea to join a company which is currently rated a BUY, but it is not great to stick around and try to wait for a turn-around if you got RSUs issued in boom times.

The "buy 100k$ every quarter" sort of model flips that thinking around. When the company does poorly, you get to sort of double down your bets on on the recovery path. And if your work pulls off a recovery, then you get rewarded directly for sticking through the bad patch (or if you don't believe in it - sell it the same day you get it and put it in ETFs, but not quit from a pay dip).

Also if the company is "buying" stock with cash intended for an employee instead of issuing it from some pool (also without an RSU discount), then this also has a nice effect of masquerading as a stock-buyback.

So it directly incentivizes people to stick at a company through a bad spot or at least softens that loss of critical talent when the company hits a rough patch without any additional distraction to the board.