Palantir has done this system for well over a decade
Shopify lets staff decide cash-stock pay mix as shares dive
271–280 of 282 posts
Re: Shopify lets staff decide cash-stock pay mix as shares dive
#272Re: Shopify lets staff decide cash-stock pay mix as shares dive
#273My experience is probably not relevant to the audience here, but having worked at startups largely in non-engineering support roles that got smaller or heavily diluted grants, I've lost about $3,000 on options in 10 years in tech. I paid in $17,500 at two places where I had vested any options, all ISOs, and cashed out ~$14,500: broke even on an IPO at $7,500 vested, and lost $3k of $10k after the company was sold for…
I think the answer is that for everybody who brags about the equity package there are 9 other people who don't talk about the underwater options or the losses they ended up taking
Working at a company for almost six years, with equity as a significant part of the compensation, and losing 20% of what I exercised - in my fourth startup with an equity component, none of them doing better than break-even - means I just do not care about equity when offered it anymore.
If I'm offered, say, $150k + ISOs now, my brain just chucks it out the other end as $150k + $0. And I got to that place even before the market started to fall over.
I remember a recruiter in the offer stage of one job describing the ISOs - "if we go 2x, your options will be worth $XX,XXX. If we go 10x, they'll be worth $X,XXX,XXX" - and I had to cut her off as gently as I could so we could get to the health insurance that I would probably be maxing out the deductible on instead. (That job didn't last long enough to vest any of the options; laid off after a leadership change/re-org.)
Re: Shopify lets staff decide cash-stock pay mix as shares dive
#274Earlier quoted context omitted.
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.
The best way to increase stock value in short/mid term - cut costs... (aka your salary/position) Your incentives never align with any of the publicly traded major tech companies. Small startups - yes, you have more leeway. Google, Facebook, Apple - yeah, no... outside of top management, your fixes to their mapping application have sweet all to do with stock value.
Great point! As a non FAANG employee, I am mostly considering the startup landscape, where I do expect my contributions to directly correlate to share value.
Re: Shopify lets staff decide cash-stock pay mix as shares dive
#275Earlier quoted context omitted.
Shopify's plan is an oddity in the industry, normally one doesn't directly trade RSUs and base comp. Netflix has allowed for this (probably still does, but I haven't negotiated against a Netflix offer recently), but I don't know of any other significant examples. That said, legally, even in the specific case of the Shopify plan, you aren't taking cash and spending it on Shopify stock. If you were, your tax situation…
> normally one doesn't directly trade RSUs and base comp You do, it just isn't spelled out. If you're getting comp in one way (RSUs), then you're not getting it in other ways (salary). The same is true of other benefits, like free food, 401k contributions, etc. It generally isn't a 1-to-1 thing, but it _is_ a tradeoff.
I look forward to your perspective when the IRS starts arguing your free food and other benefits should be taxed like regular income.
Re: Shopify lets staff decide cash-stock pay mix as shares dive
#276Earlier quoted context omitted.
RSUs are usually granted as number of shares, rather than value of shares at the time of purchase. Share price 50, you get 100 shares as RSU grant, worth 5,000. Share price 50, you get $5,000 in shares, that's 100 shares. Share price , you get 125 shares.
Qualcomm grants RSUs based on the value at the time of the grant, not number of shares. If they tell you you're getting $50k, that's what you get. Of course it moves around with the market over the course of the beating schedule. It also creates a perverse incentive since its better for the stock to be low when receiving a grant.
That's much less common than fixed number of shares, at least in my experience.
Re: Shopify lets staff decide cash-stock pay mix as shares dive
#277Earlier quoted context omitted.
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.
Because up until about 6 months ago, the 3-4 year run to that point you were better off holding. I'm sure lots of people have had a very expensive (on paper) lesson this year about how much vested stock they should hold on to (if any).
Re: Shopify lets staff decide cash-stock pay mix as shares dive
#278Earlier quoted context omitted.
Agreed - it's a mistake though to focus on the upside only.
You can protect downside by switching jobs. For many people on this thread there’s no mistake.
That's practical, but not really equivalent. Having the same in cash gives you a different set of options.
Re: Shopify lets staff decide cash-stock pay mix as shares dive
#279Earlier quoted context omitted.
I wonder what kind of collusion Europe is up to, with salaries at 50%-20% of those available in the US.
Productivity is generally lower.
2x-5x? Color me skeptical. Depending on what's behind that statement, it could actually be a bit insulting. I've been to US tech conferences; US developers aren't doing anything differently than the Northern European ones. Many times, I've heard discussions of at those conferences of processes that are more broken than the ones I wrestle with.
It's a combination of corruption, collusion, widespread inefficiencies that limits high salaries at the margins (meaning that the marginal company available to each employee is never desperate), very high pre-payroll hidden taxation. Also, importantly I think, a lack of competition between multiple globally dominant tech companies with huge profits per employee and a very obvious pathway to monetizing each additional employee's labor.
So, complex answer. But I'd stake money that collusion, often silently government-sanctioned, is significantly more common than in the US.
An example of this is very common in Norway, where practically all education is state-funded and the number of students for each profession is directly decided by the state. Private-sector interest groups have almost direct control over some of these processes, disguised as a public debate in the newspapers leading up to quota decisions. This leads to an almost planned economy of the availability of professionals.