Comp/TC philosophy at companies went under recently
Feb 21
9 Comments
Just curious (bec I am exploring to shift) how does the comp philosophy work at companies that have significantly lost their market cap in the last 6 month.
For example, PayPal, Pinterest, Zoom, Peloton, Roku, Square, Robinhood have suffered 70-80% correction from all time high as the business is not doing well enough or may be competition is taking things over. I believe these companies will continue to suffer through this year due to supply demand shift towards better and cheaper alternatives.
How does this work for those employees joined at good stock price ?
Do they give catch up equity or cash component ?
TC : $470k
Yoe : 5
comments
Due to missing financial targets the PayPal bonus was only paid at 60% this year, on top of the stock dropping, and the price of bonus shares was set a year ago.
As an example, if you are a T27 making $200k/yr, your bonus target is 20%. That means $20k in cash, $20k in stock. However, the number of shares is set the prior year. It was around $250/share grant price in Feb 2021, so you would have 80 shares that vest in 2022 for your bonus. However, since company payout was only 60%, only 48 shares actually vested. Those 48 shares also vested around $110/share, so now your $40k bonus is $20k in cash and $5300 in stock.
It gets worse, since your RSU’s also were granted at the previous year price. Assuming T27, if you were granted $100k RSU in 2021, at $280/share, that’s 357 shares. PP RSU vest at 1/3 per year, so in 2022 you would have around 119 shares vesting. Assuming PP hovers around the current price, instead of $33k in stock vesting, you are getting $12.5k before taxes.
The salt in the wound comes from the fact that PP no longer does cost of living increases due to the increase in stock price.
The only thing PP did to “help” is they will grant extra bonus shares, that vest in 2023 equal to the number of bonus (not rsu) shares you received this year. In the example above, that would be an extra 48, or $5k in stock next year to offset a “loss” of $15k this year.