- The amount of equity issued to employees at tech companies has exploded in recent years.
- The technology stock collapse subsequently wiped out the total compensation of many workers.
- One engineer saw total losses of $400,000 due to recent declines in his company.
Big Tech’s passion for attracting top talent through stocks along with the latest markets
In recent years, engineers and technology workers at major tech companies have been recruited with offers that include large chunks of stock known as restricted stock units, or RSUs. The value of the prize is frequently determined by the market price on the day it is presented. This can make some big and compelling offers when tech stocks are skyrocketing.
But now the market has collapsed, lowering salaries for many tech workers and costing hundreds of thousands of compensation.
“I think it was so reliable to join a great company that the RSUs were at least worth what they said they were worth and hopefully more,” an Uber employee told Insider. “The new thinking seems to be that they probably won’t be due anywhere close to what they’re getting, so you should probably plan like you don’t have that money.”
Some companies scrambled to retain employees by issuing millions of additional shares to settle their compensation. However, not all companies go this route because it weakens existing shareholders and often causes investors to openly express their dissatisfaction.
As a result, employees at companies like Amazon, Uber, and Block (formerly Square) told Insider they’ve seen more than two-thirds of their total compensation evaporate. Additionally, they said the meltdown is affecting their retention, and some added that this makes the perfect time to jump ship for a new company.
“It definitely lowered my attachment to the job,” the Block employee said. “I wouldn’t lose much if I were to leave for a competing show elsewhere.”
The employees requested anonymity because they are not authorized to speak to the press, but their identities are known to Insider.
Nearly half a million dollars disappear from compensation
Since tech employees tend to receive high offers, losses are equally large if they accept a heavy stock offer.
Amazon is the best-known example of a stock-heavy payout. According to regulatory papers seen by Insider, the company granted 1.4 million RSU in the first quarter of this year, more than double the number issued in the same period in 2021. Recently, Amazon shares have lost almost all of their pandemic gains, leading to losses Fatal for staff appointed at its peak.
An Amazon employee, who has been working there for less than a year, told Insider that he lost more than $250,000 in total compensation due to the stock slump.
“My main problem is that the way Amazon sets up compensation plans is in no way designed to be beneficial to employees,” the employee told Insider.
Uber has suffered a similar blow. The company faced a loss of $5.9 billion last week after it released its first-quarter earnings, and Uber CEO Dara Khosrowshahi told employees the company would begin to “treat hiring as a privilege” as the company aims to cut costs.
An Uber employee told Insider that their initial offer included approximately $178,000 in RSUs, which were awarded at a market price of $60.64. Today, Uber is trading at $23.11 per share, which means the current value of the employee’s RSUs has fallen to just $67,836.
“I wasn’t used to relying on that RSU money,” the Uber employee said. “But I can see how a lot of people have been living off that compensation now that the rug has been pulled out from under them and they could be in trouble.”
Similarly, a Block Insider employee told him he earned $250,000 in RSUs at a market price of $234. At the time of writing, Block is trading at $73 a share, which puts his shares at around $78,000 today. Another Block employee was awarded his options at about $200 per share and lost $400,000 in total compensation.
“It’s definitely a tough pill to swallow,” a Block employee told Insider. “It’s a bit deflated looking at the numbers so I try not to do that.”
Since the employees are still making good money, they don’t want to complain. What’s more, uncertainty is the problem. The Uber employee pointed out that many people have mortgages and families to support them on the assumption that they will get the money that was offered to them.
“It’s hard to plan your life around unpredictable compensation,” they said.
Some tech employees may be looking to jump ship
A sharp drop in stock prices is such a low benchmark for competing offerings at rival companies, that many may be looking to jump in. In fact, some insiders said this might be the best time to join a new company if you can find a decent offer.
“If you can get a new job, this is actually a good time to do it because getting a huge bonus when inventory is low has a lot of upsides,” said one Uber employee.
This could be beneficial for tech companies that aren’t stock-heavy with their offering, as rising stocks prove that this compensation model can be completely unsustainable.
“Even if you love the company, even if you love your job, and even if you negotiate a great compensation plan, something completely out of your control like the stock price can make it a place you can do it,” an Amazon employee said, “You won’t stay more than two years.” . “Something is basically broken there.”
Are you a technical employee and have the insight to share? Got a tip? Contact Kylie Robison at [email protected], through the secure messaging app Signal at 347-829-5826 or Twitter DM at Tweet embed.