Shopify Inc. SHOP-T is overhauling compensation packages for its employees, giving staffers more choice between cash and equity in a bid to address employment challenges brought on by the company’s fallen stock price and the hotly competitive technology labour market.
The Ottawa-based company told employees about the coming change to their salaries at a town hall hosted by upper-level executives on Thursday afternoon, according to a senior source at Shopify. The Globe and Mail is not identifying the source because they were not authorized to discuss the matter publicly.
Shopify made the changes because a one-size-fits-all strategy no longer served the company, the source said, adding that employees will walk away with an overall higher salary across most roles and locations as a result of the new compensation framework.
Previously, employees were provided restricted stock units in addition to base salaries at an allocation set by management. Now, there will no longer be a fixed amount, so employees will receive a single total compensation number and have the choice to determine how much is cash versus stock.
In theory, this means staffers may choose to allocate all of their earnings to cash only without any equity, or vice-versa, the source said. Employees can go back and change that allocation as their personal circumstances change. For example, if an employee is buying a house, and needs more liquidity, they can allocate more of their total compensation toward salary versus equity.
Restricted stock units are one way in which employers like Shopify grant company shares to employees. The grant is restricted because it is subject to a vesting period – which can be based on length of employment, performance goals, or governed by other limits on transfers and sales that a company may impose.
Shopify stock has fallen sharply from its early pandemic highs, which has led to some internal dissatisfaction among a number of employees because it affected the total value of their compensation.
Two years ago, Shopify stock traded for about $500 a share on the Toronto Stock Exchange. It went on to more than quadruple in price, hitting a record high of $2,228.73 late last year, before the bottom fell out. On Thursday, it closed at $811.12.
Dubbed by Shopify as the new “total rewards wallet,” the technology company hopes this new form of compensation – which is not fixed upon equity – will allow it to continue hiring competitively across global markets, while keeping current staff satisfied amid a war for tech talent.
The changes will fully come into effect by the second half of this year, starting in July.
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