Shopify institutes new, equity-focused employee compensation system

Sean Gallup

Shopify (NYSE:SHOP) announced Friday that it is instituting a new compensation system aimed at "bringing agency" to employees in salary discussions.

Flex Comp, as the system is called, will allow employees to choose how they are compensated via cash, restricted stock units (RSUs), or options.

“We also killed the one-year cliff on equity, so vesting begins right away, and, because life happens, allocation windows will open a few times a year,” the company said. “This means your equity will no longer be tied to the quarter you started, and you can adjust your choices as your needs change.”

The press release added that the company will “thank” employees who select RSUs or options with a “5% bonus on any extra equity they choose.”

Shares of Shopify (SHOP) declined 5.67% in Friday’s trading, bringing 2022 declines to over 76%.

Read more on recent leadership changes at the Canadian e-commerce company.

Comments

[ckarabin]

Might as well give away shares as compensation since they are rapidly falling in value. Eventually this threatens a mass employee exit as they realize they have been duped into accepting shares of minimal value in lieu of cash

[Chaffey]

@ckarabin Don't understand ? The employee has a choice but are encouraged to take shares with a bonus. Anyone that works there know the share price will go up as soon as they get inflation under control or the war ends in Ukraine.
I don't understand why you don't think this company won't recover somewhat. 30$ has been a proven bottom for months now. Just look at the chart. The stock isn't going to 6 or even 20$. Most shareholders just buy more at 30$ while we tread water waiting for the economy to improve.

[ckarabin]

@Chaffey Right, everyone there knows that the stock will go up? If they know that with 100% certainty, why don't they all take out second mortgages and buy the stock on margin?! LOL

Why don't I think the stock will rise? They lost $190MM from operations in H1. Moreover, they lost $1.1B bottom line.

[Chaffey]

@ckarabin They invested big money in Deliverr, Global Online and Affirm. Stock went down in 2 just like stocks across the board . So you are saying their is no value in any stocks across the board. What on earth do you invest in when stocks have pretty much crashed? Only oil and gold I'll guess. What would Warren Buffett do?

[MoneyPig]

The board allowed the CEO to crown himself king. They sold fear on shareholders and turned SHOP into an ATM machine for a CEO King.

[Chaffey]

@MoneyPig If you knew anything about the CEO then you would be assured that he has the power he does. It is proven that Founder driven businesses like Shop are more successful. Hedge fund owned Companies just are split up and sold in bits. Think Bill Gates and the guy at Apple whose name escapes me in my dotage.

[Dan Strack]

So simplistic it’s brilliant.

[The Real Cavalier]

Insane to think a year ago this company had a market cap of $200B.

It was the tech bubble of our lifetime. I hope people sold some.

[qwerty11]

Such good news for the existing shareholders, now their shares will get diluted even sooner. SHOP will be known in the history books as the dilutard of our time...

[The Real Cavalier]

@qwerty11 If they have $7 B of cash as Chaffey says why in the heck are they using shares if they're undervalued. Do a match in employee 401Ks if you really want to help them build wealth and loyalty. Stop diluting because its certainly impacting the share price. I still think its weird.

[Chaffey]

@The Real Cavalier Yup...they do... Lots of cash... www.macrotrends.net/...

[Chaffey]

It's entirely possible in several months that the stock is much higher and employees that take risk will be rewarded. The staff in general knows what is going on i would guess.

[The Real Cavalier]

This is weird. Is this because they don't generate sufficient cash to pay employees their full comp in cash? Offering employees 5% extra to take non-cash comp seems reckless.

[User 48061751]

@The Real Cavalier in some way they're rewarding/incentivizing employees who have long-term conviction in the company and will withstand the hard times

[Chaffey]

@The Real Cavalier Shop has 7 billion in cash...they could pay staff in gold bullion if they wanted. It just isn't prudent.

[qwerty11]

@The Real Cavalier They think shares are free money (they are right actually). That's how the management does business.

[Henry Little]

As shares continue to crash, employees will opt for cash comp and operating cash flow will deteriorate. Disclosure, I own puts.

[Victor Justice]

@Henry Little …why did you feel the need to disclose your put positions? Did you do this for potential legal reasons or are you just taking a moral stand in what you stated?

[Henry Little]

@Victor Justice So that anyone who reads my comments (especially when they are bearish) knows I actually have a position and am not just spouting things without any skin in the game. Just trying to be transparent and honest.

[TigerCub911]

I bought some $HOP at $30.03 on 9/6. Will be adding some more if it goes down. Hopefully it won't go down too much. I feel sorry for Cathie Wood's ARK ETF holders though. Cathie doesn't employ market timing at all...