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> Stock-based compensation expense ($)2,237,149 for the year, that's not a typo!!!!! Yep, to be clear that's in thousands of $. So $2.2 billion. That includes
by JauntTrooper 9y ago
> Stock-based compensation expense ($)2,237,149 for the year, that's not a typo!!!!!
Yep, to be clear that's in thousands of $. So $2.2 billion.
That includes a one-time $637 million RSU grant to the CEO immediately before the IPO, which was 3% of the company. The shares vested immediately at IPO and weren't subject to any continued service requirements.
- abalone 9y agoI recall that Snapchat uses backloaded vesting (10/20/30/40), unlike most startups, so perhaps that explains why this figure seems unusually large. I don't necessarily understand the details of Black–Scholes but I think it allocates the expense according to the vesting schedule. So if I'm right, we're seeing the lion's share of those early grants (around 2012-2013). Anyone want to chime in on how exactly this expense is calculated? I feel silly in that I don't even know if it's supposed to include the gain in value in the current reporting period, as opposed to just the FMV at grant date spread over the vesting period.
- JauntTrooper 9y agoYou won't need Black Scholes for these. Black Scholes is just a formula to estimate the value of a stock option. It doesn't say anything about when to allocate expenses, that's governed by GAAP accounting rules. Under US GAAP, the value of stock-based compensation has to be recorded at the fair value at the date of grant, not date of vest. The date of vest is used to decide when the award shows up as an expense. If a company is public, the value of an RSUs is probably just going to be the trading price. Snap's RSUs were a little more complicated because the grant dates of the pre-IPO awards were before the company was public, so they had to estimate the grant date fair value at the time using third party valuations, recent stock issuances to investors, and internal valuation techniques. If you look at their initial SEC filing, Snap says it issued 169.9 million RSUs from April 2015 - December 2016, and estimated the values to range from $15.36 - $16.33. The weighted average value of those shares was $2.7 billion. That's valuation. Now let's talk expense recognition. Those awards only show up in the income statement as an expense once they are expected to actually vest, after subtracting out expected forfeitures. That's why only about half of the $2.7 billion I mentioned above showed up so far in their financial statements so far. The rest of it will show up over the next three years.
- ng12 9y agoI'm still struggling to put this number into context. Are they grossly overpaying rank-and-file engineers? Or are there just a lot of players elbow-deep in the cookie jar?
- flunhat 9y agoTake this with a grain of salt, but I heard that some new hires at Snapchat were getting $400k+ in equity, so that might be one of the reasons why it's so high.
- what_ever 9y agoThere were some datapoints on /r/cscareerquestions of $320k of RSUs for new grads starting last year. Although the vesting schedule was 10%, 20%, 30%, 40%.
- ChuckMcM 9y agoHe is going to have quite the tax bill this year :-)