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Number of shares is useful in several ways, especially for new employees looking to compare the value of a promotion / offer versus what the company is paying s

Number of shares is useful in several ways, especially for new employees looking to compare the value of a promotion / offer versus what the company is paying somebody 2-3 years their senior. You can backtrack and ask “what did the company think its stock was worth two years ago?” If a company drops the number of shares much faster than the stock appreciates, then that can signal they over-value their stock. Both Facebook and Uber saw large declines in the stock price during the 1-2 years surrounding their IPO. Facebook was going for $40-45 during the months before their IPO (at $38), and 6 months later they fell to $20. Microsoft today might have a similar boom and bust. In these sorts of cases there will be lots of employees compensated unfairly one way or another. When total comp offers are all similar, a major differentiator can be how much hubris a company shows valuing their own stock.

Thorrez 7y ago
>especially for new employees looking to compare the value of a promotion / offer versus what the company is paying somebody 2-3 years their senior. If you want to compare what you are given to what someone else is given, isn't grant price better than number of shares? Grant price is what the company gives people. >If a company drops the number of shares much faster than the stock appreciates, then that can signal they over-value their stock. Maybe. Or maybe the company is simply paying employees less. Or maybe they're migrating to provide more compensation via salary or bonus instead of stock. Why would a company cut down on the number of shares granted if they overvalue their stock? Another thing is that a company could do a simultaneous stock buyback, which wouldn't cause the number of shares in existence to increase, and would only cost the company market price for the stock. If you are given the average number of shares that an employee has vest per year, how can you determine if a company is dropping the number of shares? Really what you would want is data on every single grant event each employee has been given. If you know the date of each grant event, it's then equivalent whether you know the number of stocks of each grant event or the dollar value at grant time of each grant event.

Thorrez 7y ago

>especially for new employees looking to compare the value of a promotion / offer versus what the company is paying somebody 2-3 years their senior. If you want to compare what you are given to what someone else is given, isn't grant price better than number of shares? Grant price is what the company gives people. >If a company drops the number of shares much faster than the stock appreciates, then that can signal they over-value their stock. Maybe. Or maybe the company is simply paying employees less. Or maybe they're migrating to provide more compensation via salary or bonus instead of stock. Why would a company cut down on the number of shares granted if they overvalue their stock? Another thing is that a company could do a simultaneous stock buyback, which wouldn't cause the number of shares in existence to increase, and would only cost the company market price for the stock. If you are given the average number of shares that an employee has vest per year, how can you determine if a company is dropping the number of shares? Really what you would want is data on every single grant event each employee has been given. If you know the date of each grant event, it's then equivalent whether you know the number of stocks of each grant event or the dollar value at grant time of each grant event.