Do companies adjust for poor stock performance?
Considering going to a FAANG and curious if companies compensate if stock drops. So say I initially get 400k/4 years, then during 3rd year that 100k I was supposed to get that year is down 50% so it's 50k, do they make up for that with more shares to get to the same $$ figure? Is this not how it works at all?
You probably don't want that, because if stock grows, you want to benefit from that
Yea thought about that too.
Nope. They won't make adjustments to past awards.
If the stock goes down, and people's RSUs aren't worth as much, and employees start leaving because they can make more money elsewhere, and the company wants to keep some of them, then they'll grant new RSUs or otherwise raise comp. There's not some system defined now for all time - they're just trying to pay the minimum they can and still hire and retain people with decent morale.
Amazon does this, folks in the middle of their first grant won’t see anything new until afterwards because 3x price growth in 2years is insane. But if you are below target you get topped off. I’ve heard Microsoft has previously done a one-time balancing thing in the past and someone mentioned Google doing it. The difference is Amazon’s upside, given the same stock growth, would be much lower. Downside is less meaningful as well, so risk aversion might be a selection factor in going anywhere.
Amazon has a minimum target that they want you to get for TC and they will make up the difference if your stock value doesn't get you to that amount. Most other companies do not. Sometimes, there is a 1 time adjustment, but those are exceptional. Remember that is stock drops by 50%, you will likely also get 2x the stock for your refreshes since most companies use a dollar value, not a number of shares the define the grants. More likely, if the company finds that it systematically isn't competitive because stock valuation isn't able to attack and keep talent, they will change their compensation plan - or accept that they won't hire top tier talent. However, if one of the FANG stocks is imploding, it is likely due to a broader downturn, not be company specific, so everyone else's stocks are down, too. This is why many people here advocate that you don't rely on your stock compensation to meet everyday living expenses. The only thing that I can promise you for sure is that it will eventually slow down - just can't tell you when.
@nononsense you are the real MVP!
I'll bet if the stock took a %50 hit there would be layoffs. If you were lucky and kept your job and the rest of the market also took a %50 hit then you probably wouldn't get any salary adjustments and if the rest of the market was fine then executive leadership would try to sell you a story about cinching up your belts and working hard to turn things around. I doubt either way a hit that big would result in any stock adjustments. But I'm usually pessimistic when it comes to trusting business people.
For Google, the targets are dollar amounts, divided by stock price on grant date.
Oh really ? So you don't gain anything from goog increasing ?
All the stocks for 4 years are granted on joining date, so they do gain from Goog increasing.