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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

#21

Post by maerF0x0 »

mabbo wrote: post #18

In no way do I speak for my employer, but on a personal level, this has been amazing for me and I'm so grateful the company did this. I'm very conservative about investing, and don't want to have a large amount of my portfolio tied up in the company I work for. I'm maxed out on cash (there's a minimum equity portion at my level) and my additional income goes into a broader portfolio of investments.

Its a very efficient thing for them to do too if ultimately you're just going to sell all and then reinvest.

Ideally they would have started this program at a high stock price, but now better than never.

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

#23

Post by Shindi »

shabbatt wrote: post #15

Personally if I was a shopify employee and I was looking at all these layoffs coinciding with rate rises with more to come, I would think liquidity will quickly dry up and opt for cash. I am open to rebuttals but I'm hearing that we will be seeing double digit interest rates again like the 70s.

I guess it depends on your financial goals. I'm a younger big tech employee that has at times seen my income drop in half. However, I personally believe tech will have a massive rebound in the next 2-10 years and long term capital gains tax is really nice.

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

#24

Post by baq »

its_bbq wrote: post #17
shabbatt wrote: post #13

Earlier quoted context omitted.

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.

ELI Financially Illiterate. What do high Fed interest rates mean in this case?

it'd mean your savings account would beat the S&P500 (after it finds a bottom obviously; this year having cash in a 0% savings account has been amazing!).

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

#25

Post by MEMORYC_RRUPTED »

mabbo wrote: post #18

In no way do I speak for my employer, but on a personal level, this has been amazing for me and I'm so grateful the company did this. I'm very conservative about investing, and don't want to have a large amount of my portfolio tied up in the company I work for. I'm maxed out on cash (there's a minimum equity portion at my level) and my additional income goes into a broader portfolio of investments.

Same here.

It's also nice that I happen to live in a country that gives a tax break on your (monetary, not stock) income, so that makes the choice for money even easier.

Reinvest it in an index fund, and forget about it. Yeah, I might miss out on significant gains, but I might also not. Less risk for a reasonable yield.

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

#26

Post by bumby »

bushbaba wrote: post #5
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.

This is the same as statistically from loading a 401k out performs DCA throughout the year. Sure this year sucks, but if only 1-2 years out of 8 perform worse, BUT 6-7 years you perform better. Then holistically you’re still better off. When you invest look at the long term not short term.

Isn't this dependent on timing and isn't part of the point of DCA to mitigate timing risks?

E.g., If I loaded my 401k just before the bottom fell out of the market, you need a much higher proportion of good years to dig out from that hole. With DCA, you would have a shallower hole to climb out of.

(Possible I misinterpreting what you meant, or that I am just not financially saavy enough to chime in)

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

#27

Post by duxup »

mabbo wrote: post #18

In no way do I speak for my employer, but on a personal level, this has been amazing for me and I'm so grateful the company did this. I'm very conservative about investing, and don't want to have a large amount of my portfolio tied up in the company I work for. I'm maxed out on cash (there's a minimum equity portion at my level) and my additional income goes into a broader portfolio of investments.

>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)

Some folks got really upset by that. The argument at that time was "we don't to be a part of employees suddenly being broke if things go south".

About a year later they were right, things went south. Our stock did sorta well in the long term (not great short term of course), but IMO it was a good choice.

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

#28

Post by tensor »

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 lose significantly as the stock moves around. I've never in my life seen an equity plan like it, and that's not a comment on whether it's good or bad, just that it's unusual.

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

#29

Post by mabbo »

duxup wrote: post #27
mabbo wrote: post #18

In no way do I speak for my employer, but on a personal level, this has been amazing for me and I'm so grateful the company did this. I'm very conservative about investing, and don't want to have a large amount of my portfolio tied up in the company I work for. I'm maxed out on cash (there's a minimum equity portion at my level) and my additional income goes into a broader portfolio of investments.

>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, in their 40s and early 50s mostly.

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

#30

Post by duxup »

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,…

Yeah I knew some folks at the time (.com days) who had life changing type money in company stock and they were able to sell a good portion of it at will. They didn't sell... it did not work out for them.

To this day I don't get why they didn't sell at least say $1million and stash it someplace. Sure let the rest ride if you want to do that but man save some. I never asked them about it after their company tanked, I imagine they don't want to think about it.

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