[HN Gopher] Shopify lets staff decide cash-stock pay mix as shar...
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Shopify lets staff decide cash-stock pay mix as shares dive
Author : jbredeche
Score : 190 points
Date : 2022-09-16 13:56 UTC (9 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| trynewideas wrote:
| My 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 less
| per share than the strike price of my options.
|
| If I had stayed at the IPO'd company longer I could've gotten a
| higher-class of option, but my salary there was $15k/year less
| than the bootstrapped no-equity company I left them for, and the
| returns over two years of vesting would've still been less than
| one year of difference in salary.
|
| At most of the places I worked, I either didn't make enough money
| or experienced too much external financial distress to actually
| buy all of the options I vested. Which is good, because none of
| them appreciated and most depreciated in value by 20%. If I had
| exercised all of my vested options I would've lost up to another
| $5-7k - at best I would have lost another $2-3k.
|
| The only RSUs I was ever offered vested 2 weeks after I left a
| job that I'd had for almost six years, for a role elsewhere
| paying $25k/year more. The RSUs were a surprise bonus worth less
| than $5,000 and tacked onto everyone at the company, including
| roles that had already gotten larger RSU grants. If I had stayed
| two weeks longer and vested them, then when the company sold they
| would've been worth less than $4,000. Between the salary
| difference, a much smaller insurance deductible at the new job,
| and a 4x larger 401k match, I had effectively made up the
| difference by my fourth paycheck (eight weeks) just on salary.
|
| On my experience I'd take the cash every single time. Reading the
| replies here, it seems like engineers, managers, and early hires
| live in a completely different reality regarding equity.
| htrp wrote:
| 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
| mabbo wrote:
| 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.
| maerF0x0 wrote:
| 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.
| MEMORYC_RRUPTED wrote:
| 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.
| duxup wrote:
| >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.
| mabbo wrote:
| 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.
| duxup wrote:
| 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.
| bombcar wrote:
| People can feel it's "disloyal".
|
| So keep some but don't keep all!
| AYBABTME wrote:
| 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.
| JAlexoid wrote:
| Let alone, a lot of people seem to think that they get
| the lower capital gains tax on the RSUs... and most
| companies fail miserably to educate their employees.
|
| Not to mention the horror that is the tax code in US,
| causing you to underpay taxes... because the company that
| does RSUs doesn't communicate well with your regular
| payroll company.
| dehrmann wrote:
| https://en.wikipedia.org/wiki/Endowment_effect
| Macha wrote:
| Yeah, even if I think my company will do well, having a
| large part of my net worth tied up in stock of my
| employer always feels a bit of an "eggs in one basket"
| scenario - if something happens to majorly impact the
| stock value, there's a decent change it will consequently
| impact my job security.
| gadders wrote:
| It's 14 years since Lehmans went bust. Plenty of people there
| lost their wage and their investments (in Lehmans stock) when
| the company went under.
|
| Stock options can be great, but you need to be aware of the
| concentration risk.
| mym1990 wrote:
| Isn't one benefit of these programs(from the employer side)
| that employees are more directly tied to company outcomes,
| and thus will put out better work/product? Of course one
| person won't shift the stock price, but as a collective, over
| time, it certainly would.
| duxup wrote:
| I think it is, but the question is how much of an incentive
| do you want (some) but maybe not overwhelming incentive
| where a bad quarter is completely demoralizing or worse...
| JAlexoid wrote:
| That's just unsubstantiated claim.
| mym1990 wrote:
| Hence the wondering part, I personally have never been in
| such a structure, so I don't have first hand experience.
| BUT from everything that I have read, extrinsic
| motivation such as "work harder so your company does
| better so your stock goes up" doesn't seem like it would
| really hold up for too long.
| fiat_fandango wrote:
| I think the better move for most of these folks is to wring as
| much cash as they can out of their current gig at Shopify and
| trade up to a new gig with a fresh stock grant at basically any
| other company. Joining G / Meta right now gives you incredible
| leverage if things bottom out any time soon.
| amrocha wrote:
| https://twitter.com/tobi/status/1570791158691012610
|
| It's funny seeing the example they give has total comp at 200K
| considering that a year ago they were still paying less than 100K
| USD (sightly over 100K CAD) for senior staff
| danbrooks wrote:
| I interviewed with Shopify earlier this year and they were
| offering ~200k for "Senior" tech positions.
| amrocha wrote:
| Glad to hear it! I remember reading news that they increased
| pay across the board. Probably to deal with the exodus of
| fully vested senior staff that happened during covid.
| mugivarra69 wrote:
| i think tobi needs to talk to his shopifolks
| thoraway8474637 wrote:
| Tobi doesn't talk to anyone anymore - they literally cancelled
| the weekly all-hands so he didn't have to speak to us.
| [deleted]
| xal wrote:
| Added some additional information here:
| https://twitter.com/tobi/status/1570791158691012610
|
| It's a really great system. We recommend that people borrow from
| it liberally.
| knrz wrote:
| When people ask about what it's like doing tokenomics for
| crypto projects, well, it's an exercise in applied systems
| design. Bravo on this system man! Any plans on open sourcing
| some of the stuff, like the math?
| [deleted]
| shabbatt wrote:
| 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.
| Shindi wrote:
| 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.
| mmastrac wrote:
| 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.
| dboreham wrote:
| Do you mean "traded cash for stock"?
| mmastrac wrote:
| Yeah, fixed it in my comment - thanks!
| Nifty3929 wrote:
| I guess it's a bit ambiguous which direction you mean, either
| way. Maybe "gave up stock in exchange for cash" or vice
| versa?
| [deleted]
| boringg wrote:
| 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.
| mjr00 wrote:
| 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
| looking a lot closer to 2000 than 2008.
| [deleted]
| zibby8 wrote:
| 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.
| kgwgk wrote:
| > Valuations are very low right now.
|
| Very low compared to what?
| pessimizer wrote:
| In the specific case of Shopify, stock value is 20% of
| what it was a year ago, and 80% of what it was a month
| ago. Isn't that what's relevant?
| kgwgk wrote:
| Not when the discussion in this sub-thread was about the
| "tech sector". (And it's not obvious if the valuation of
| Shopify is "very low".)
| leviathant wrote:
| Shopify's explosive stock growth always struck me as kind
| of scammy - or to be more charitable, the results of a
| very well targeted marketing campaign. It's back to where
| it should be - along the way, VTEX and BigCommerce jumped
| on the IPO train at exactly the wrong time. Everyone was
| sniffing their own farts in that sector for the last two
| years. Glad to see it come back down to earth.
| [deleted]
| anm89 wrote:
| Companies that lose money have gone from trading at a
| multiple of infinity to earnings, all the way down to a
| multiple of infinity on earnings...
| boringg wrote:
| Lots left to go down. Think of the global events right
| now - all we need is one or two more destabilizing events
| and we're in a bigger heap than we are currently.
|
| The bubble may have burst but doesn't mean you've
| bottomed. Still haven't seen many companies go belly up
| or VC fund shutdown. All we've seen is valuations drop
| and some layoff but not big layoffs and also the
| valuation dropped from their spectacular highs so its all
| relative.
| mjr00 wrote:
| Nobody can predict the bottom, or how low things will go.
|
| But I disagree that valuations are very low. Frankly,
| many tech companies (Uber, Twitter, etc) are still
| unprofitable money-losing machines with high valuations
| because of their potential growth and expectations of
| future profitability. There's an argument these companies
| should be worth much, much less.
|
| For the past ~10 years in particular, investors haven't
| cared about profitability; a market downturn may change
| that.
|
| Also, as the recession or depression continues,
| advertising is going to get scaled back and may destroy
| ad-tech companies like Alphabet/Google and Facebook.
|
| Your prediction is as good as mine, of course. But I'm a
| bear, expecting a river of blood to flow through the
| streets of Silicon Valley.
| zibby8 wrote:
| I agree with your general assessment of the economy, but
| those are all factors everyone knows.
|
| The adjustment we saw earlier this year was going from
| "the economy is booming and interest rates will be 0
| forever" to "interest rates are going to 4% and we're
| going to have a recession." That's an absolutely massive
| adjustment in expectations and stock prices, especially
| of high growth tech companies, reflect that adjustment.
|
| In order for valuations to drop substantially further, a
| similar expectation adjustment would need to happen.
| Something like "I thought we were going to have a
| recession but now it's worse than the Great Depression".
| Simply adjusting expectations from "minor recession" to
| "moderate recession" isn't big enough to crater the
| markets like we saw earlier this year.
| ghaff wrote:
| Look at how a _lot_ of valuations dropped during dot-
| bomb. 50% is nothing.
| adventured wrote:
| I agree with your point, however there has been plenty of
| 70-80% (or worse) destruction as well.
|
| Fiverr -88%, Fastly -92%, Pinterest -72%, Zoom -87%,
| Shopify -82%, Roku -85%, DocuSign -82%, Twilio -84%,
| Virgin Galactic -91%, DraftKings -75%, Palantir -82%,
| Coinbase -80%, Robinhood -88%, Rivian -78%, Roblox -72%,
| Unity -83%, Nikola -94%, Peloton -94%, Snap -86%,
| Square/Block -73%, Zillow -84%, Teladoc -90%, UiPath
| -84%, Affirm -83%, SoFi -75%, DigitalOcean -70%, Asana
| -83%, Okta -80%
|
| That's in the realm of a dotcom bubble style implosion.
| There are plenty of other prominent names to add to that
| list. Having lived through the dotcom destruction, this
| rhymes, even if it's not exactly the same.
| mjr00 wrote:
| Very true. But the crazy thing is, in the opinion of many
| people, these companies were so overvalued that -80%
| feels like a "correction" more than a "crash".
|
| 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.
| jacques_chester wrote:
| "Every time I've traded cash for winning lotto tickets it's
| worked out for me in spades in the long run."
| wikfwikf wrote:
| https://xkcd.com/1827/
| nyokodo wrote:
| > it's been very good to me on three separate occasions.
|
| Were those occasions during the mass retirement of the boomer
| generation leading to accelerating liquidation of stock market
| positions while the replacement generations are inadequate in
| number to replace the retirees during the collapse of
| globalization likely causing drops in worker productivity? Or
| were they during the longest stock market bull run in history?
| neon_electro wrote:
| 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.
| shabbatt wrote:
| 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.
| triceratops wrote:
| Sounds like the thing to do now is sell everything vested so
| far, then hodl new vests. Falling prices means the vests will
| hit with lower income (and smaller tax bill) but are likely
| to go up when interest rates fall again.
| nemo44x wrote:
| Considering they're pushing 75% in Argentina, 10% sounds like
| a deal.
| UncleMeat wrote:
| Is your hedge fund manager friend shorting bond funds like
| crazy? If not, why not?
| shabbatt wrote:
| One would think so but he is cash and says he is unsure. He
| thinks that inflation may not be curbed even with low
| double digit rates!
| its_bbq wrote:
| ELI Financially Illiterate. What do high Fed interest rates
| mean in this case?
| Sebguer wrote:
| People invest more in companies when interest rates are
| low, because shoving it into lower risk vehicles becomes
| less profitable / likely to beat inflation. As interest
| rates rise, the value of safer places to put your money,
| such as bonds, increases.
|
| This is the super simple version.
| JAlexoid wrote:
| Also money market returns are significantly higher.
| helge9210 wrote:
| Stock price is calculated as a sum of future cash flows
| (dividends D, for example) discounted by time value of
| money (risk free rate r, for example): sum(P_n), where P_n
| = D / (1 + r) ^ n and n is a year. When rate r is up P
| automatically down.
| matwood wrote:
| When the risk free rate goes up (which is what happens when
| the fed increases rates), then risk gets re-priced across
| all assets.
| dahfizz wrote:
| It means that there will be less investment cash pumping up
| the valuation of startups.
|
| High rates means that there is less liquidity overall
| (people don't want to borrow money and invest it), and it
| means that there are decent alternatives to investigating
| in startups (if T bonds pay 10% guaranteed, why burn cash
| on a company that will probably fail?)
| rchaud wrote:
| - Higher int rates make it more expensive for companies to
| borrow, and to invest in additional production capacity.
| Depending on the company, this can cause their stock price
| to decline as lower investment usually signals lower
| revenue growth in the future.
|
| - Higher int rates also encourage consumers to put money
| into savings accounts and bonds instead of stock markets,
| which lowers demand for stocks --> lower stock prices -->
| market indices fall as well (S&P500, Dow Jones Industrial
| Average). Movements in these indices are considered a
| barometer for the broader economy.
| baq wrote:
| 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!).
| shabbatt wrote:
| It means the stream of capital being injected into
| companies, startups, incubators is inversely correlated to
| fed interest rates.
|
| Likewise for real estate sector, the monthly mortgage
| payments increase as rates rise and that puts a big strain
| on the mortgage holder to continue.
|
| Now instead of real estate, think startups, stocks, tech.
| Everybody is beholden to the obligations at the rate
| dictated by the fed.
| cortesoft wrote:
| It depends on what stage your company is, but the vast majority
| of start ups fail... so for most people at startups, cash is
| going to be much more reliable. I worked at two startups prior
| to my current job that both went out of business. I had a few
| opportunities to take more equity or cash, and I'm glad I took
| cash every time. I would have gotten zero if I took the equity.
| bushbaba wrote:
| 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.
| bumby wrote:
| 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)
| UncleMeat wrote:
| But on average the market goes up. You _can_ lose with lump
| sum investment as early as possible. But you will be more
| likely to lose by waiting and only slowly purchasing in.
| The value of DCA is in emotional regulation since it
| softens swings at the cost of reduced expected value.
| time_to_smile wrote:
| > 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 are not allowed to do any
| hedging (such as buying protective puts).
|
| Even if you're wildly bullish on your company, at the very
| least diversify a bit with highly correlated stocks (for
| example if you're a GOOG during the last decade at least split
| it up among other FAANG). This way you can at least protect
| yourself in the event that your particular company gets hit
| hard.
|
| It's incredible how far away the dotcom burst is in people's
| minds (or even 2008). Cheap money has led to an insane period
| of growth in tech, but investing as though that were the norm
| is very risky (without even optimizing your reward for that
| risk).
| rahimnathwani wrote:
| Endowment effect.
| jacques_chester wrote:
| Or simulation heuristic:
| https://en.wikipedia.org/wiki/Simulation_heuristic
| rahimnathwani wrote:
| Yeah. I didn't know the name for this, but have seen it.
| muglug wrote:
| The best financial decision I ever made was to sell my shares
| after vesting.
|
| I realised that even if I believed in the long-term business
| model of the company, having a significant portion of my
| money tied up with a single stock was not a good idea.
|
| It would have still been a good idea _even if_ those shares
| hadn 't lost 90% of their value in the following year.
| ghaff wrote:
| I was working for a major tech company--definitely not a
| startup during dot-comb. I had some amount of vested shares
| which seemed a lot at the time. I spent some but held onto a
| few tens of K$. Stock went down from over $100 at peak to
| about $4. By years later had recovered to about $25-and then
| Dell acquired for a premium.
| [deleted]
| turtlebits wrote:
| 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.
| AYBABTME wrote:
| 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).
| breput wrote:
| I generally agree with selling as soon as possible but
| there are some significant capital gains tax advantages
| for holding vested RSUs for a year. 15 to 20% vs. 32 to
| 37%.
| AYBABTME wrote:
| Actually there isn't, other commenter explains why.
| ryanwaggoner wrote:
| They're taxed as ordinary income when they vest, and only
| gains and losses from that point are considered capital
| gains or losses. And your cost basis is the value they
| vest at, so it's no different than getting cash and
| buying those shares immediately. No special advantage to
| holding for a year vs any other stock you acquire with
| cash.
| breput wrote:
| > They're taxed as ordinary income when they vest
|
| That's correct, whether you sell them immediately or hold
| them.
|
| > and only gains and losses from that point are
| considered capital gains or losses
|
| That is also correct and was my original point. If you
| sell immediately, you've already paid the (personal
| income rate) tax and you're done. But if you don't sell
| immediately, waiting a year is preferable so you are able
| to claim the long term capital gain rate instead of
| paying the short term/income rate.
| ryanwaggoner wrote:
| But those benefits and trade-offs have nothing to do with
| RSUs, it's just how all stocks are treated. And thus not
| relevant to a consideration of whether to hold RSUs or
| sell immediately on vest.
| bombcar wrote:
| Selling them instantly also protects you from selling
| based on insider knowledge later (most employees won't
| really hit this but who knows).
| hedora wrote:
| There is an advantage if you are in the middle of a tech
| rally, and the other option is the investing in whole
| market.
|
| All you need to do is time the next downturn...
|
| I have (and continue to) err on the side of
| diversification. Without fail, I have simultaneously
| regretted it and done better than colleagues that held
| and tried to time the market.
|
| I could have realisitically made 2x what I did. However,
| I also could have made half as much (and know people that
| did halve their income playing these games). Halving my
| income would have had a much bigger impact than doubling
| it.
| time_to_smile wrote:
| There's still no advantage in a tech rally, you'd be
| _far_ better of reinvesting highly correlated companies,
| where you have much more liquidity (since you 're not
| only allow to sell during trading windows) and you also
| are allowed to perform better hedging in the case the
| market does start to get shaky, plus your portfolio will
| not drop based on the possible misstep of a single
| company.
|
| > I have (and continue to) err on the side of
| diversification
|
| I'm in the same camp as you, and the point I always make
| is that: If I'm wrong and our company stock sky rockets,
| beating everyone else in the market, then great! I still
| have unvested RSUs, we'll get larger bonuses, plus my job
| security has increased, sure I missed out on even more
| gain but I'm in a good place!
|
| If I'm right, and something bad happens to my employer,
| at least my loses will be reduced by my other
| investments. I don't have to worry about everything
| falling apart at once.
|
| Which I suppose is the entire point of variance reduction
| in the first place: it makes the great times a bit less
| great, but also makes the worse times not so bad.
| tensor wrote:
| 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.
| gopalv wrote:
| > they've done is nearly completely untie compensation from the
| stock price.
|
| 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.
| cma wrote:
| > 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.
| JimmieMcnulty wrote:
| (One of) the largest retailers in the world also does this, I
| believe.
| lumost wrote:
| This might be better for most of employees. Big companies
| rarely benefit from the standard "lock in folks on the upswing"
| and "incentivize them to leave on the downswing" that stock
| grants usually do.
|
| When the stock goes up, difficult conversations emerge when the
| company realizes it's paying someone the equivalent of an
| entire team. On the way down it's hard to manage comp
| expectations. An individual engineer rarely impacts the bottom
| line in a material way.
|
| Which is to say, if tech workers can demand high six figure pay
| - it should probably be mostly cash for most public companies
| and individuals.
| hedora wrote:
| I have heard of these. I wouldn't accept an offer like this
| unless the fixed comp was 2-3x normal market value for my
| services.
|
| (The stock of my employers usually goes up during my vesting
| periods, and usually by well more than is needed to double my
| total comp -- the 2-3x is risk adjusted)
| disgruntledphd2 wrote:
| If your career mostly spans the last decade, it should be
| noted that this was a really really weird decade in terms of
| asset appreciation vs inflation.
| foobarian wrote:
| If there is a vesting start delay then it's still not
| equivalent to an ESPP. But once you're in the middle of the
| pipeline I guess it's pretty similar.
| londons_explore wrote:
| 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?
| Vvector wrote:
| 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.
| sokoloff wrote:
| This is incorrect by almost every reading. (There is a
| "technically correct" reading that the _grant_ is not an
| expense, but the _vesting thereof_ is and most of your post
| is concerned with the "paying in stock" angle, not the
| granting of future paying in stock.)
|
| https://carta.com/blog/what-is-asc-718/
|
| https://www.investors.com/news/technology/amazon-stops-
| prete... (see the third paragraph about $FB)
|
| What you might be confusing it with is non-GAAP accounting,
| which some companies prefer to cite/reference in management
| conference calls and letters to investors, where equity-
| based compensation is often backed out to arrive at the
| non-GAAP figures.
| overrun11 wrote:
| Maybe he/she is thinking of a cash expense? Stock
| compensation will inflate operating cashflow on the
| statement of cashflows.
| jacques_chester wrote:
| 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.
| kazinator wrote:
| It seems like it would be along these lines.
|
| - The company may have to issue new stock for this.
| That's like a loan: some entity gives cash, in exchange
| for a piece of the pie. Not in the expense side of the
| ledger. This is where the value of the shares gets
| diluted, but I don't think that fluctuations in the value
| of stock go into the ledger Publicly traded stock
| fluctuates all the time; that can't be going into the
| books!
|
| - If the entity is some body of the company itself which
| is buying the stock, in order to give it to employees,
| than that plausibly looks like an expense. Buying stock
| (in anything) would normally be recorded as an asset, I
| would think, but if the intent is to give it away, then
| it looks like an expense. Analogy: a laptop bought for
| company use would be an asset, but if it's intended to be
| ginve away as a door prize in a raffle, then it's an
| expense.
| kgwgk wrote:
| What "would be" along those lines?
|
| GAAP are what they are.
| [deleted]
| jayp wrote:
| Is this really true?
| kgwgk wrote:
| No.
| [deleted]
| WaxProlix wrote:
| It's easier to make stock out of thin air (well, sort of)
| than cash, and accounting wise it's much more pleasant for
| companies to do so.
| acchow wrote:
| > 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.
|
| I thought Stripe moved to this compensation model last year
| tyre wrote:
| Yes we have this (I work at Stripe). It is an annual
| recurring grant that has a one year cliff then renews
| automatically to vest quarterly.
|
| Say you get an offer with $100k in RSUs. That's then divided
| by the stock price and that's your initial grant. It vests in
| one year. After that you would do the same math again, except
| this time 1/4th vests quarterly.
|
| It has pros and cons. It works well in challenging
| macroeconomic environments for the reasons others have
| mentioned.
| paxys wrote:
| 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 and
| just pay cash salary and bonus, like every other industry.
| twblalock wrote:
| 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 are
| retaining their normal compensation programs.
| foobarian wrote:
| Should that be FAAG? Wasn't Netflix famously the one big
| tech co that paid all cash?
| kevdozer1 wrote:
| I just don't think that acronym will catch on
| PragmaticPulp wrote:
| > The companies that are changing this are the ones whose
| stock tanked, and they are worried that employees will
| leave because of it.
|
| This is exactly why companies are doing it.
|
| If you're compensated in units of stock and the stock price
| goes down, you are incentivized to switch to another
| company to restart the whole process.
|
| It's a negative feedback loop. Company struggles -> stock
| price declines -> employees leave -> company struggles more
| -> repeat.
|
| I know employees want the best of both worlds (stock
| appreciation when it goes up, refreshers when it goes down)
| but realistically I expect more companies to move toward
| defined cash payouts now that we're out of the unusual bull
| market of the past decade.
| ericmay wrote:
| If they all _wink wink_ do it at the same time then it
| doesn't matter.
| twblalock wrote:
| Yeah but they aren't. And they won't.
|
| If there was collusion going on, compensation never would
| have skyrocketed over the past decade.
| faangiq wrote:
| Comp is still 2x less than it should be
| mrguyorama wrote:
| There have been _multiple_ times in the past decade that
| FAANG colluded to decrease wages.
| marvin wrote:
| I wonder what kind of collusion Europe is up to, with
| salaries at 50%-20% of those available in the US.
| twblalock wrote:
| I can only think of one, and it was an anti-poaching
| agreement from 2005 that the involved companies paid
| compensation for later. I haven't seen any reason to
| believe that is still happening.
| wikfwikf wrote:
| This is foolish.
|
| When public companies give stock to their employees, they
| dilute the stock as much as if they issued stock and sold
| it. So the cost of that compensation is the same as if it
| were in cash.
|
| If everyone knows that say, Netflix's stock price is
| guaranteed to go up 20% a year for the next 5 years, then
| the market price of that stock would suddenly jump up to
| the point where it no longer makes excess returns. So the
| market price of the stock reflects the company's (risk-
| adjusted) growth potential already. This also applies to
| non-public companies with any amount of maturity - the
| marginal investor has a good sense of what the company is
| worth and does not want to lose out by issuing stock below
| that.
|
| Put these two together and giving employees stock is
| economically not very different to giving them money and
| they choosing to invest it in mutual funds. The main
| difference is that you make your employees' lives slightly
| harder - with taxation and with the fact that they need to
| sell stock to get cash for what they want to buy or invest
| in.
|
| The reason that stock options are preferred, especially for
| private companies, are none of them very good. Firstly
| employees have an inflated perception of what their company
| will be worth in the future. They assume that it's going to
| be AirBnB, not WeWork, not Palantir, and not the failed
| start-up that you've never heard of. Secondly employees
| also don't correctly discount uncertainty. Would you rather
| have the cash to buy your dream home/pay off your mortgage,
| or take a 10% chance of 10 times that amount of money? To
| most of us the second option is worth considerably less.
| Thirdly companies sometimes feel better about giving out
| pieces of paper that they have an unlimited supply of than
| giving out their own cash, even though it's a wash
| financially. And lastly there used to be some tax
| advantages to firms paying with stock options - those were
| loopholes which have largely been closed.
|
| Making your employees into investors (by giving them stock
| options) only made economic sense when venture capital
| money was scarce and expensive. This has not been the case
| for a long time.
| joshl32532 wrote:
| > When public companies give stock to their employees,
| they dilute the stock as much as if they issued stock and
| sold it. So the cost of that compensation is the same as
| if it were in cash.
|
| Companies DO prefer to grant RSU instead of cash bonus,
| because it'll provide liquidity to their stock and make
| employees engaged with the company's performance. One of
| Netflix's benefit is they're cash heavy in their
| compensation, which SWE do prefer.
|
| The dilution is not a problem, since they'll buyback
| stocks anyway.
| wikfwikf wrote:
| Buybacks are not alchemy; buying back stock just uses the
| same money that you saved when you issued stock instead
| of paying in cash.
|
| Of course, the stock price might have gone down, but also
| it might not. Companies don't usually time buybacks right
| to buy stock cheaply.
| dcow wrote:
| Specifically regarding your second paragraph: I think
| you're overlooking the market's ability to value tech
| stock. If everyone _knows_ Netflix is gonna jump 20% a
| year for the next 5 years then everyone would dump their
| entire savings, take the penalty and reinvest their IRAs
| even, into Netflix. Why doesn't this happen?
| wikfwikf wrote:
| Because there is never a point at which everyone knows
| that Netflix is going to jump 20% a year for 5 years.
|
| That's my point. There are times at which people think
| this is what it's going to do, and after it's done it
| lots of people believe it to have been clear in
| hindsight. But the situation where people know in advance
| for sure that there will be huge excess returns never
| occurs.
|
| Netflix is a great example. Would you have been keen to
| take a large amount of income deferred and in stock at
| the point when streaming was just a weird perk bundled
| with the DVD mailing subscription?
| opportune wrote:
| Because during those 2nd, 3rd, 4th years those employees
| have much larger compensations than they would get on the
| market, and companies would rather keep the stock if they
| don't need to compensate employees that much to retain
| them.
|
| 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.
| echelon wrote:
| 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.
| neon_electro wrote:
| 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.
| lr4444lr wrote:
| I don't think you want this. Even in a firm that is under
| 10 mil., if you are granted hard equity, you're going to
| be liable for taxes on those shares, which will be
| extremely illiquid. Options or RSUs let you have your
| cake and eat it too, at a small price.
| LudwigNagasena wrote:
| The choice depends on your risk tolerance/aversion.
| JAlexoid wrote:
| 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)
| gpderetta wrote:
| But as long as the cash bonus has the same nominal value as
| the stock grant there is not much of a downside for the
| employee as in the worst case they can just buy the stock on
| the market (which should be possible for a large tech
| company).
| twblalock wrote:
| From experience, that's not true. A bonus of $N is worth
| $N. A stock grant of $N has turned out to be worth $2.5*N
| or even more, by the time it finishes vesting.
|
| Could it have gone the other way? Of course, and it's often
| likely that at startups stock could be worth zero. But at
| large companies, even with the recent dips in stock prices,
| employees who joined 2+ years ago are better off with stock
| grants than they would have been with equivalent fixed-size
| cash bonuses -- so much so, that would often have to take a
| pay cut to work anywhere else.
| time_to_smile wrote:
| > by the time it finishes vesting.
|
| Right and during that vesting period if you had been paid
| cash you could have invested that money in a wide range
| of assets that are both more liquid and are not perfectly
| correlated with your source of income.
|
| Now if we're talking a bonus that would be paid at the
| end of the vest period such that you can't invest that
| money until you would have vested anyway then stocks is
| theoretically going to have increased by the risk free
| rate, so it's expected value will be higher than the
| bonus (however it's much higher variance).
|
| Everyone has weird thoughts in their heads about RSUs
| people the last decade has been insane, and no one
| remember the last tech crash. The next one will be bigger
| and when you realize you are getting laid off at the same
| time that your RSU drop to near zero, it will feel like
| the variance might not be worth it.
| ghaff wrote:
| >Everyone has weird thoughts in their heads about RSUs
| people the last decade has been insane, and no one
| remember the last tech crash. The next one will be bigger
| and when you realize you are getting laid off at the same
| time that your RSU drop to near zero, it will feel like
| the variance might not be worth it.
|
| As I wrote elsewhere, who knows? But in the dot-bomb
| crash, large solvent companies saw their stock tank by
| 95%. And, by the way, to first approximation no one was
| hiring so you're not just going to hop to another
| company.
|
| Hopefully everything will be reasonably fine but I think
| a lot of people have an unrealistic expectation of worst
| case scenarios.
| gpderetta wrote:
| If you get the cash immediately, then you still buy the
| stock on the market if you expect it to go up. If the
| cash also comes on a vesting schedule, if you expect the
| stock to go up, you could buy call options on the market
| with expiries that match the original schedule, at the
| current strike price. Of course this has much more
| friction and some cost.
| everforward wrote:
| Right, but the stocks start earning value immediately and
| cash bonuses do not. Assuming gains are even at 5% per
| year, and the bonus is $100k (because the math is
| easier):
|
| With RSU's, you get $400k _1.05^4 (4 years of compounded
| growth)
|
| With cash, assuming you immediately invest the money, you
| get $100k_1.05^4 + $100k _1.05^3 + $100k_ 1.05^2 + $100k
| *1.05
|
| Running those numbers, the RSU's are worth $486,202 at
| the end and the cash is worth $452563. RSU's appreciated
| by $86k over the duration, cash appreciated $52k over the
| duration.
|
| It's the time value of money. Getting it earlier makes it
| worth more.
| JAlexoid wrote:
| Cash sign on bonuses typically get paid out early, and
| have an "unearned" timeframe.
|
| Therefore you get cash earlier, than any stock.
| sokoloff wrote:
| You have to use two ** to "escape" the italicizing that
| happens with multiple single * in your post.
| vineyardmike wrote:
| 30K of missed growth on 400K doesn't seem so bad to not
| have 400K tied up in a single company.
|
| If, along those 4 years, your company tanks 25% (Shopify
| tanked over 50%), you'll be able to abandon the
| investment (and get 100k a year of something else), or
| double down and get more shares (aka dollar cost
| averaging).
| gpderetta wrote:
| Yes, that's why I suggest you should buy calls on the day
| your grant would have been assigned if you think the
| stock will go up.
|
| Of course most people won't do it because is very risky.
| Yet getting RSUs has similar risk (or larger as you can
| lose more than the option premium).
|
| There might be US tax implications that I'm not familiar
| with of course.
| darkwizard42 wrote:
| You aren't allowed to do this in the US. Lot of
| regulations on your RSUs and when you can sell etc.
| including derivatives on your vested and unvested stock.
| gpderetta wrote:
| We are talking about a scenario in which you get cash not
| RSU.
|
| Also I'm not familiar with the US case, but I understand
| those limitations are contractual not regulatory and thus
| have no bearing in what's would be optimal for the
| employee.
| BMorearty wrote:
| Replacing stock compensation with cash salary and bonus would
| be a terrible idea.
|
| Other industries should be moving toward employee ownership,
| not the other way around. Employee ownership creates shared
| incentives. Shared incentives create alignment. Alignment
| helps eliminate an antagonistic relationship between
| employees and management. Instead of them vs. us, it moves it
| more towards all us. Instead of the fat cats and the lowly
| workers, everyone gets to reap the benefits or share the
| losses. Of course the founders and execs get more, I'm not
| saying it's equal, but it is a far better system than pure
| cash.
| vineyardmike wrote:
| > employee ownership, not the other way around. Employee
| ownership creates shared incentives. Shared incentives
| create alignment. Alignment helps eliminate an antagonistic
| relationship between employees and management.
|
| I don't think this scales to something big. Eg Amazon gives
| stock. Amazon even gave stock to warehouse workers. I don't
| think many people, from warehouse workers to senior AWS
| SDEs feel a true sense of shared alignment, and I bet many
| share a sense of antagony with management.
|
| I work at a different megacorp. I don't feel meaningfully
| like an owner. My 500k in RSUs is meaningless compared to
| the $2T market cap. Nancy Pelosi probably owners more
| shares than me.
| crote wrote:
| On the other hand, stock compensation does come with
| significant drawbacks.
|
| Due to tax implications, your options might be worth
| significantly less - if anything at all - because you often
| have to pay taxes before you are able to sell them. If your
| company is not yet publicly traded, there is a significant
| chance it'll be heavily diluted by the time you are able to
| actually sell it. Even worse, you might _never_ be able to
| sell it. You might not be able to leave the job when you
| want to, because you are essentially tied to the stock
| option vesting period. It also significantly increases your
| personal risk: what happens when the company performs
| poorly? You might lose both your job and your wealth at the
| same time.
|
| The way I see it, the antagonistic relationship exists
| because management is judged primarily by the shareholder
| value they create. To an employee, the company is their
| daily life. To a shareholder, the company exists solely as
| a means to create money. I would not want to work in a
| company where everyone is driven solely by shareholder
| value.
|
| Personally, I'd strongly prefer it if the employer had a
| workers council, and just gave out bonuses when it was
| doing good. You still share in the benefits, but you have
| far less personal risk.
| JAlexoid wrote:
| > You might not be able to leave the job when you want to
|
| That is something that people love to ignore - vesting
| periods are created specifically to keep you from leaving
| for a better job. While keeping the risk for the company
| fairly low.
|
| Low mobility has been proven time, and time again, to
| repress income growth in people. (more often linked to
| owning a home, and not being able to move for a job)
| bombcar wrote:
| Most employees ditch the stock as fast as they can, and
| arguably they should.
| JAlexoid wrote:
| That's a load of BS.
|
| You're an employee, not a co-owner. You're paid to do a job
| and, more often than not, your input is completely
| irrelevant to the leadership.
|
| And as someone who is paid to do a job, not to be a
| practical co-owner, you should be paid in cash.
|
| I currently work at a 50 people startup... and guess what?
| I'm no co-owner, no matter how much options I get. Last
| reorganization was done without my input... and no one will
| ask in the future. If you think you're anything more than a
| service provider - you're either in the executive
| management or deluded.
| BMorearty wrote:
| You'd rather the tech industry work like industries where
| only founders and executives reap windfalls of exit
| events? If your reply is that the company can offer
| bonuses when the exit event happens, (1) most companies
| don't do this after the fact but stock is a way to force
| it to happen and (2) this doesn't help employees who
| stayed for many years but didn't happen to be there at
| the moment of the exit.
| neon_electro wrote:
| I can agree with this in principle, but in practice, who
| gets to write the contract governing this stuff? Do
| employees get a say?
|
| I had options at my last job. They were worthless to me the
| entire 4.5 years I spent there. It wasn't until 2 weeks
| after I was let go the company announced it was being
| acquired and my lottery tickets became worth something.
|
| 4.5 years of opportunity to be engaged at a deeper level as
| a shared owner of the business, wasted because the business
| never wanted me to be a part owner in the first place.
|
| Definitely looking for more companies that operate the way
| you would expect here!
| PuppyTailWags wrote:
| > I can agree with this in principle, but in practice,
| who gets to write the contract governing this stuff? Do
| employees get a say?
|
| This is precisely what unions are for. It's possible to
| develop a professional organization that then informs
| expected standards of employment, such as shares in
| ownership of the company. The Actors Guild for example
| will specify and fight for the intellectual property of
| actors part of the guild, including in contracts where
| members of the guild are hired.
| BMorearty wrote:
| Were you able to exercise those options after the
| acquisition was announced? Did you finally get the payday
| you were hoping for?
| ryanisnan wrote:
| 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.
| JAlexoid wrote:
| 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.
| modeless wrote:
| So it's not an equity grant at all then. It's an employee stock
| purchase plan. You choose how much of your compensation buys
| stock and you get a small discount on the purchase price
| (called "bonus" in the article). That is exactly an ESPP.
| [deleted]
| nahname wrote:
| An ESPP is directing earned cash into stock. You buy the
| stock at time of payment.
|
| This is directing equity into RSUs or ISOs at the open of the
| window. You will be subject to price fluctuations over the
| window, which you wouldn't be with an ESPP.
| modeless wrote:
| The window being one quarter? That still makes this more
| similar in practice to an ESPP than a standard four year
| RSU grant.
| idontpost wrote:
| ESPP's have special tax rules that RSU's don't so the
| distinction is still very important.
| nahname wrote:
| Yes, this would be for one quarter. I also agree it is
| quite similar to an ESPP, especially for the majority of
| people. I doubt many would be willing to allocate 80-90%
| of their total comp to ISOs.
| JJMcJ wrote:
| 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.
| pastor_bob wrote:
| Yes, to me this basically sounds like ESPP without the
| discount
| kodah wrote:
| 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 utility for
| people to rise economically.
| MikeTheRocker wrote:
| I don't understand how it could be preferable to be paid
| in public equity you could otherwise buy with cash
| zachur wrote:
| It can be preferable because RSU's typically have a basis
| that reflects the price of the stock at the time they're
| granted. So if you're granted $100k in RSU's per year at
| year 0, and the price of the stock doubles by year 1,
| you'll actually receive $200k worth of stock.
| ulfw wrote:
| And when it halves (like it happened to most tech stock
| over the last year) you get $50K by year 1. If that
| doubles you finally get your 100K again by year 2.
| medvezhenok wrote:
| I think the point is that RSUs are preferable if the
| stock goes up, and cash is preferable if the stock goes
| down. If the stock stays flat, there is no difference
| between RSU/cash split.
|
| I think most people's assumption that the market will go
| up over time so most people would prefer RSUs. How
| accurate that assumption is in the short-medium term
| remains to be seen.
| shard wrote:
| To be more general, RSUs are preferable if the stock goes
| up higher _relative to other investments that the grantee
| could have picked_ , and cash is preferable if the stock
| performs worse than other investments that the grantee
| could have picked. For example, if the stock rises but
| performs worse than an index fund, then the grantee would
| have been better served to have gotten cash and put it
| into a no-effort index fund. If the grantee has an
| aptitude for stock picking, the balance sways even more
| towards cash being preferable.
| Thrymr wrote:
| Not true, because the cash would be distributed over time
| (as increased salary or bonus) as well, not a lump sum up
| front available for investment.
| hamburglar wrote:
| And yet if you look at most tech stocks that "halved"
| this year (which, btw, is an overstatement for most),
| they're still up from 2 years ago. My company's stock is
| down 25% but my RSUs that vested this year were still
| worth a hell of a lot more than when they were granted
| 2,3, or 4 years ago.
| hamburglar wrote:
| It's a matter of the difference between when they are
| granted versus when you receive them. If I tell you I'm
| going to give you $100k cash in 4 years, that's wildly
| different from if I tell you that in 4 years I'm going to
| give you stock purchased at today's price for $100k. Yes,
| the upside relies on the stock going up, but that upside
| can change things quite a bit.
| MikeTheRocker wrote:
| This makes sense, thank you
| pxx wrote:
| You get a small free option if job change costs are zero.
| Unvested equity can appreciate. The option is only really
| free if you can change jobs effortlessly if it
| depreciates, but that's close enough to true if you're
| motivated enough.
|
| Note that this is still catastrophic in terms of
| diversification. And you can compare job change costs
| directly to how much paying for this option would cost.
| spaceywilly wrote:
| 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?
| gshulegaard wrote:
| 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.
| [deleted]
| kgwgk wrote:
| > 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.
|
| Identifying a company that is going to return 10000% is
| difficult. However, identifying a company that is going
| to return 10000% _and_ getting a job there is also
| difficult.
| htrp wrote:
| > Identifying a company that is going to return 10000% is
| difficult. However, identifying a company that is going
| to return 10000% _and_ getting a job there is also
| difficult.
|
| If you can do the first part, you're already working on
| sand hill road.
| modeless wrote:
| 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 and
| try again at a different company, you're not locked in.
| ulfw wrote:
| I don't know a single tech stock that has (significantly)
| appreciated over the last 12 months. I know a ton that
| depreciated by 2/3rds.
| sulam wrote:
| While I would avoid trying to time the market, anyone
| starting now has a much lower "cost basis" (they're not
| spending money, it's not a cost) and better chance at
| their RSUs appreciating while they vest. Using the last
| 12 months as a guide for the next 4 years isn't a
| reasonable way to analyze this.
| RHSeeger wrote:
| > they're not spending money, it's not a cost
|
| I'm not sure I follow that. If you're getting those
| shares instead of a higher salary, there's no effective
| difference between that and a cost you paid out of pocket
| (except for certain tax implications).
| sulam wrote:
| 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 would be
| more complicated.
| doktorhladnjak wrote:
| Netflix lets you take a fraction of your pay in long term
| options, not RSUs
| sokoloff wrote:
| Which leaves the employee with less upside going forward,
| at which point they can switch companies and "start over"
| with an RSU grant that is at par. In this regard the
| initial grant has a bit of flavor of an option. You have
| the option to stay on the vesting schedule or change
| companies and start a new vesting schedule, but any
| losses on unvested amounts don't hit you if you switch.
| paulmd wrote:
| incentivizing productive employees (the ones with the
| most alternatives) to quit if the stock price (or the
| stock market generally) goes down is a hell of a side-
| effect when you put it like that.
|
| I guess that's the monkey-paw side of "incentivizing the
| employees to make the company perform by giving them a
| stake in the upside"...
| sokoloff wrote:
| That's why a lot of companies will issue special grants
| to their highest performing/most critical employees if
| the shares drop a lot. That makes for a good "double
| dipping" if the shares recover.
| marssaxman wrote:
| Real Networks did that for us, after the dot-com crash.
| The stock promptly dropped some more, and never
| recovered. I've been deeply skeptical of stock-based
| compensation ever since...
| JAlexoid wrote:
| 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.
| leoqa wrote:
| You made a bad bet. Many engineers optimize for high
| growth 4-year grants above all else.
| scarface74 wrote:
| Don't confuse brains with a bull market...
| JAlexoid wrote:
| Considering that at that point I was with IBM for 5 years
| before the grant, that wasn't a bet at all
| RHSeeger wrote:
| > That's an extra 600k of upside exposure.
|
| It's also an extra 600k of downside exposure.
| MichaelBurge wrote:
| No, the downside exposure is limited because you can quit
| your job. You don't have to actually eat a stock drop
| loss by working for 4 years and vesting a loser, you can
| change to another job and reset your basis.
| MajimasEyepatch wrote:
| True, but there's an opportunity cost to having worked at
| Company X on the assumption that your RSUs would
| appreciate in value, when in fact they decreased and you
| could have worked at Company Y instead.
| kodah wrote:
| Anecdotally, I've never had RSUs depreciate to a point at
| which I metaphorically lose money for my efforts. This
| might happen at startups more often and megacorps less
| often.
| akavi wrote:
| Then this past year you've gotten lucky.
|
| We were in an unprecedented bull run for tech stocks for
| more than the past decade. No guarantee that continues.
| Markets are anti-inductive and past performance is no
| guarantee of future results.
| arcticbull wrote:
| RSUs have a $0 cost basis - these aren't options we're
| talking about. Yes it's technically a $600K downside risk
| but if you recognize anywhere close to that your company
| went bankrupt and that won't factor into the conversation
| since you won't have a job anymore.
|
| This kind of up-front grant is a wonderful asymmetric
| bet. You get $600K skin in the game on day 1. If the
| stock goes up 20% you get a 20% gain on the _whole_
| amount before you even own it. If it goes down
| materially, you 're welcome to quit - but more often what
| happens is actually the company issues a refresh grant to
| make up for it - since they don't want you to quit. If it
| goes back up you now have a ton more stock on the way
| back up.
|
| You get to earn appreciation on the whole amount _before
| you earn it_ so up to 4 years early. You have nothing of
| your own at risk except your time. Things go well, you
| can do _amazingly_ well. If things go bad, you lost a
| year or two and you can wander down the street for
| another lotto ticket.
| cbm-vic-20 wrote:
| > If you have RSUs worth 200k per year
|
| I am clearly working at the wrong company.
| arcticbull wrote:
| Depends on your level and your geographical location but
| a staff engineer could vest anywhere from 300K-800K per
| year depending - more if you see some meaningful stock
| appreciation over time. Staff engineers are like top ~10%
| of a company's engineers. That number can go up
| significantly if you're a principal engineer.
|
| 200K seems pretty average for a senior engineer role
| (i.e. a 'terminal' role, not an up-or-out junior role) in
| the Bay Area on top of a 150-200K base.
| fennecfoxen wrote:
| Clearly.
| Sohcahtoa82 wrote:
| I joined a startup last year and was given a $200K salary
| and $50K in stock options. If we're successful and reach
| a valuation of $5B, my options will be worth $1M.
|
| And that's not even accounting for evergreen option
| grants and bonuses.
| spaceywilly wrote:
| "if" is the key word there. Most companies don't make it
| to IPO, and even if they do it would be a long wait. In
| the mean time your shares are illiquid, the paper they
| are written on is worth more. I'd prefer to take the cash
| alternative and put it into safe investments.
| bombcar wrote:
| AND there could be any number of rounds of funding before
| a successful Exit.
|
| It's best to value the options at $0 and consider them a
| lottery ticket.
| Sohcahtoa82 wrote:
| Oh yeah, it's a lotto ticket for sure. Even starting the
| job, I told my wife I was playing the startup lottery.
| She's fine with it since we have over 6 months of
| expenses in savings, and work in security, I won't have a
| hard time finding a new job if we went belly up.
|
| The company is very transparent with the numbers, though.
| Every month we have an all-hands meeting and the CEO goes
| over numbers, including current ARR, burn rate, balance,
| and runway.
|
| We received a $75M Series C in May, and in our last
| fiscal year we 4X'd our ARR. We're doing pretty well.
| ska wrote:
| The main thing to remember is that typically early stage
| options for an engineer will make you a bundle iff
| everyone else gets paid (often first).
|
| When things go badly, or even just not well, it doesn't
| matter what your plan was or how transparent everything
| is - the founders/board may be staring down a choice
| between folding the company up or decimating the equity
| of everyone currently holding it. It's a pretty easy
| decision usually. The good ones will take it on the nose
| with everyone else, the others ... well they aren't
| taking the same hit.
| taxman22 wrote:
| You'd be granted $200k in RSUs over 4 years, but actually
| be getting, 20,000 RSUs if the stock price was $10. Fast
| forward a few years and the stock is trading at $100.
| You're now earning 10x more.
|
| Edit: added "over 4 years"
| JAlexoid wrote:
| Or you could get that cash and buy the same stock,
| without restrictions that come with RSUs.
|
| Oh... also... "Tax Man 22" - RSU grants are taxed at the
| time they vest. So if your 20000 RSUs vest at $100, then
| you pay regular income tax on $100... not lower capital
| gains tax on the $90 per RSU.
|
| Just the tax benefit is higher on cash, than RSU.
| idontpost wrote:
| No, you can't.
|
| The number of people in this thread who don't understand
| RSU grants at all is kind of shocking.
|
| You're granted $800k of RSUs up front at the current
| stock price, 25% percent vests every year. That is VERY
| different than buying 200k of stock every year because
| the 800k is all granted at the INITIAL price, whereas
| buying 200k every year buys stock at the CURRENT price.
|
| If you could take 200k cash every year and then time
| travel back to the start of the period with it and buy
| the stock, THAT would be equivalent to RSUs.
| ska wrote:
| You are right that it is different, but it's not
| unambiguously better.
|
| In the rather special case that stock price is
| monotonically increasing, there is an obvious benefit to
| locking in the earliest price you can.
|
| On the other hand, if you have more cash every paycheck,
| you can trickle it into other potentially high growth
| companies and spread your risk. And you don't lose
| anything by leaving on a date you choose. And, as shopify
| has recently demonstrated, being locked into last years
| price could mean you _lose_ a lot.
|
| We've just left an extraordinary period of growth for
| tech stocks, but it won't always be that way.
| idontpost wrote:
| > You are right that it is different, but it's not
| unambiguously better.
|
| That's a separate issue from the common misconception in
| this thread that cash is the same as RSUs.
|
| RSUs have more risk than cash, and more potential upside.
| They are unambiguously different.
| ska wrote:
| Agreed - it's a mistake though to focus on the upside
| only.
| JAlexoid wrote:
| > No, you can't.
|
| What are you replying to? That you cannot buy the stock?
| Because that is demonstrably false.
|
| > If you could take 200k cash every year and then time
| travel back to the start of the period with it and buy
| the stock, THAT would be equivalent to RSUs.
|
| Except that's not what the OP wrote.
|
| > The number of people in this thread who don't
| understand RSU grants at all is kind of shocking.
|
| Let me rephrase you - The number of people, yourself
| included, who are completely ignoring what the OP wrote
| to just rant about RSUs and seem more intelligent is...
| not shocking at all.
| marcinzm wrote:
| 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.
| saagarjha wrote:
| If you had $200k in yearly TWTR you'd make $100k this
| year. Things don't always go up.
| marcinzm wrote:
| If you joined in 2019 then you'd make around $200k this
| year. Last year you'd have made around $350k. Still
| better or equal to getting cash every year.
| RHSeeger wrote:
| So, the lottery is better than a savings account, because
| if you win the upside is much higher? Whether or not
| stocks options/rsus/whatever are worth more than an
| increase in salary is very dependent on the timing, the
| company, and variety of other things. You can just as
| easily point out losing situations as you can winning; in
| fact, I'd wager the losing is more common.
| marcinzm wrote:
| It's a fairly controlled bet with relatively little
| downside (companies are likely to cover a large drop in
| RSU value) and a lot of upside. Since the vesting window
| is 4 years, you can sell as soon as things best, you
| still get a salary and you can switch jobs at any time
| the risk isn't that high. And since you can make up a
| decade of regular income in a few years the logical
| approach is to roll dice when younger if you can.
| spaceywilly wrote:
| Couldn't you use the 200k cash alternative to buy AAPL,
| theoretically, and end up in the same boat? And in that
| case you can also buy a mix of other stocks to diversify
| instead of having it all in one company. I'd take cash
| any day personally.
| potatolicious wrote:
| No, because in order to achieve the same outcome you'd
| need to have $800K to buy AAPL in 2019. Taking your $200K
| in cash each year will result in buying $200K of AAPL in
| 2020, $200K of AAPL in 2021, etc... which bypasses a
| great deal of the gains.
|
| Part of the power of RSU packages is that is equivalent
| to a _very_ large stock purchase that is a multiple of
| your earning power that you earn out of over time.
|
| So yes, if you have a lot of liquid capital, taking a
| $200K/yr stock package from Apple in 2019 is "equivalent"
| to putting $800K into AAPL all at once. The trick is that
| more people can do the former than the latter.
| marcinzm wrote:
| No, the future unvested RSUs increase in value with the
| stock price. Your cash comp doesn't.
|
| If you got cash then you'd have made $200k the first
| year, $200k the second and $200k the third.
|
| If you got RSUs then you'd have made $350k the first
| year, $660k the second and $800k the third.
| spaceywilly wrote:
| No I would make 400k the first year. It's cash as an
| alternative to the RSUs, not just deleting the RSU part
| entirely
| marcinzm wrote:
| That wasn't the example I gave to simplify things but
| sure if you want that then:
|
| If you got cash then you'd have made $400k the first
| year, $400k the second and $400k the third.
|
| If you got RSUs then you'd have made $550k the first
| year, $860k the second and $1000k the third.
| tharkun__ wrote:
| That assumes you just keep the cash. I think what they
| meant was:
|
| 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.
| travisjungroth wrote:
| They asked if you could "end up in the same boat" by
| getting paid the same amount in cash as RSUs. You can't.
| There's a common misconception that RSUs are _only_ more
| restrictive than cash, that if you got paid in cash you
| could just use the cash to buy the stock and end up in
| the same position. This is just not true.
|
| RSUs have downsides. That was never in question in this
| thread (as much as people keep affirming it).
|
| RSUs also have financial upside over the equivalent
| amount of cash. That's the thing people keep trying to
| explain but also seems to get brushed off.
|
| $100k cash and $200k RSUs per year in a stock that
| increases by 10% each year: after 4 years I have $400k
| cash and $1.171mm in stock.
|
| $100k cash and $200k cash given to me at the beginning of
| the year to buy the same stock for 4 years: $400k cash
| and $1.021mm in stock.
|
| They're just not the same. RSUs have leverage. They have
| upside and downside.
| tharkun__ wrote:
| Fair enough on the exact same boat. Very unlikely given
| the companies that usually have RSUs in that value range.
| You would have to get RSUs in a company that is less
| likely to go up than what you could invest in with the
| cash.
|
| For a less sky rockety company that still offers RSUs I
| would take my chances with the cash and actually ending
| up in a better boat.
| marcinzm wrote:
| You can also invest the RSUs that vest or keep them. In
| my example I assumed you cashed them out instantly and
| did not invest the resulting cash. So while the cash
| looks better with investments so do the RSUs.
|
| That also means the risk of RSUs is also not as high as
| you paint it out since you don't keep them for 4 years.
| After the 1 year cliff you can sell them as they vest. So
| you're only risking future money rather than money you've
| already gotten. Unless the stock goes below the original
| stock price then you're still ahead. If it does then you
| either get a top up or find a new job.
| tharkun__ wrote:
| I see it this way: with RSUs you are betting on one egg.
| Your company. There are things about RSUs that make them
| more attractive than getting cash and betting on another
| single egg. If I can get cash instead I will. I don't
| count the RSUs as a decider in that sense. Given my risk
| tolerance I'll take extra cash if I can and invest it
| into multiple eggs instead. Over the past 10 years that
| probably would have made me loose out on money. We will
| see how it goes in the next few. When all tech stocks are
| tanking I bet it's going to be hard to switch to another
| company where things would be better. Having bought
| stocks that have paid dividends through many years of
| recessions with the cash I got seems better to me. Of
| course you could have sold those sweet RSUs and bought
| more of those same dividend paying stocks than I can.
| Power to you if you did. Somehow I doubt most people that
| choose the RSUs have done that and instead only cashed
| out to buy a house or a Tesla etc. Not saying that's you
| or everyone. I drive a 11 year old car I bought used. And
| would even if I had taken RSUs ;)
| idontpost wrote:
| > Couldn't you use the 200k cash alternative to buy AAPL,
| theoretically, and end up in the same boat?
|
| No you couldn't.
|
| You'd have to put in several years of 200k of cash up
| front to end up in the same boat.
| bombcar wrote:
| I assume you could leverage options to get something
| similarish but with a larger downside.
| idontpost wrote:
| That's still not "ending up in the same boat".
| pc86 wrote:
| It is even worse than an ESPP, but also pushes your
| compensation out up to 90 days from when you should be earning
| it. It's literally the worst combination of all the options.
| [deleted]
| ranman wrote:
| Do you know if this creates significant administrative
| overhead?
| knodi123 wrote:
| > So what they've done is nearly completely untie compensation
| from the stock price.
|
| But it IS tied to the change in price- right?
| jxf wrote:
| No. Your total compensation is fixed. You're deciding how
| much of it goes to stock (as opposed to your _grant size_
| being fixed).
| pc86 wrote:
| Using the example above, you get $25,000 in stock every 3
| months. So the number of shares are variable, so the price is
| irrelevant to you. If you sell as soon as you get it, it's
| the same as $25k cash, e.g. completely divorced from the
| stock price.
|
| If it was tied to the stock price, like every other RSU
| program on the planet, you'd get x number of shares. So as
| stock price goes up, your compensation goes up. Your
| compensation is tied to the stock price.
| foolfoolz wrote:
| this is a massive pay cut for anyone working at a growing
| company. you lose so much potential upside with the stock if
| you keep "buying in" each quarter/year instead of once at the
| beginning of a 4 year grant and hoping it goes up.
|
| this looks like a great way for companies to protect themselves
| from spending too much on employee stock compensation and frame
| it as a gift of choice
| 3bproblem wrote:
| Stripe does this, and Coinbase's move to annual equity grants
| also has a similar effect. There are a lot of tradeoffs in all
| directions, but the fundamental one is that the reduction in
| risk naturally carries an equivalent reduction in ability to
| participate on the upside (eg table at the bottom here:
| https://www.aeqium.com/post/a-survey-of-equity-refresh-
| progr...).
|
| You can also argue that it's not good for employees, because
| downside is capped (stock goes to $0, you keep your salary) but
| upside is unlimited (Shopify becomes the next Microsoft, you're
| still driving a Kia).
| leoqa wrote:
| The reality is that RSUs are a better deal because of the
| unlimited upside. If my RSUs go to zero, I jump to another
| company and reset my cost basis- there is actually little
| risk here beyond the first year lock up.
| akavi wrote:
| That's effectively an implicit call option. You can buy an
| explicit version on the public market.
|
| The question is "Is the cost of an explicit call option
| greater than the cost of finding a new job?"
|
| There is some benefit in that with an explicit call option,
| you have to pay up front, while with job switching, you
| only incur the cost if the implicit option "expires
| worthless". But that's balanced by the fact that with the
| implicit option you're exposed to sector-wide risk (eg, see
| the current tech-wide turndown), while you're not with the
| explicit one.
| gpderetta wrote:
| Pretty much. Also with the call option you have to pay
| the premium (and possibly the rollover cost if for some
| reason you wanted to match exactly the equivalent RSU
| schedule), on the other hand if the stock price goes down
| at worst you lose the premium, while the downside with
| RSU can be much larger.
|
| In practice it would be foolish to invest a large part of
| your salary in call options of the company you work for.
| But for the same reason RSUs are also similarly risky and
| you should always prefer cash and diversify your risk
| instead.
|
| Edit: If you buy an at the money call and sell the
| equivalent put you can reduce the premium and replicate
| the risk profile of the RSU. But I'm not an option
| trader.
| LudwigNagasena wrote:
| What is even the point? Some of sort tax benefits?
| Bombthecat wrote:
| I would short this stock waiting for its implosion...
|
| So
|
| Many
|
| Sites are using shoppify when they basically sell no or one
| product per year...
| boringg wrote:
| https://www.fool.ca/2020/01/11/shopifys-shop-stock-price-soa...
| cyral wrote:
| Considering it went from $1,600 or so to $300 (adjusted for
| split, as it is really $30), you may be a bit late for that
| alex_young wrote:
| It still has a $40B market cap
| debacle wrote:
| Yahoo Finance for Shopify
|
| https://finance.yahoo.com/quote/SHOP?p=SHOP&.tsrc=fin-srch
|
| Yikes.
| pc86 wrote:
| -5.4% today
|
| -8% 5-day
|
| -19.25% 1-month
|
| -76% YTD
|
| -79% 12-month
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