Shopify has been ramping up its stock awards to Tobi Lütke in recent years. Shopify Inc. headquarters signage in Ottawa on Tuesday, May 3, 2022.Sean Kilpatrick/The Canadian Press
Shopify Inc. said late Friday its founder and chief executive officer Tobi Lütke plans to sell more than 2.5 million shares in the company, worth $233-million at current prices, over the next 15 months.
It’s a sliver of his wealth: Mr. Lütke owns nearly 80 million shares of Shopify stock and has an additional five-million-plus options for the company’s shares. His stock holdings are worth more than $7.3-billion at Friday’s Toronto Stock Exchange closing price of $90.89. That stake makes Mr. Lütke one of Canada’s richest individuals.
Shopify says Mr. Lütke has adopted what’s called an “automatic securities disposition plan,” which allows a company insider to sell stock at regular intervals according to preset conditions, put in place when the insider does not have material, non-public information. The idea is to insulate the insider from allegations of insider trading. Shopify says Mr. Lütke used these plans from 2017 to 2021.
Shopify said Mr. Lütke will sell up to 2,564,964 class A shares in the company, with the plan ending no later than Dec. 31, 2025. All the stock that he could sell under the plan will come from stock options and restricted share units that Shopify gave him as compensation. The plan does not include Mr. Lütke converting any of the Shopify multiple-voting shares that allow him to maintain control of the company.
Shopify said the Ontario Securities Commission exempted Mr. Lütke from the prospectus requirements of Canadian securities law for the sales of the shares under the plan, but required Mr. Lütke to make an announcement about the plan.
Shopify has been ramping up its stock awards to Mr. Lütke in recent years.
In February, the company granted him stock awards valued at US$150-million, making it one of the largest compensation packages in Canadian history. In 2018, Shopify valued Mr. Lütke’s stock-option grants at US$4-million. The grant value increased to US$10-million in 2019 and US$15-million in 2020. From 2021 to 2023, Shopify valued the grants at US$20-million each year.
The options vest, or become usable, in chunks over time. The 2024 grant, for example, won’t be fully available to Mr. Lütke until 2029.
In addition, Shopify’s stock has had its ups and downs, and his options from 2021, 2022 and 2024 are all out of the money, or have an exercise price higher than current market prices.
In its 2024 proxy circular to shareholders, Shopify said the compensation committee of its board of directors had a “strategic imperative to empower Mr. Lütke to focus on driving sustained performance and shareholder value over an extended timeframe.”
The multiple-voting shares give Mr. Lutke 40 per cent of the votes at Shopify and he also has a special “founders share” awarded in 2022 to ensure his future control of the company. Shareholders approved the founders share with only 54 per cent of the vote at the time, signalling some pushback to that plan.