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> they've done is nearly completely untie compensation from the stock price. Not entirely, they've created a relationship, but it is the opposite of what is no
by gopalv 4y ago
> they've done is nearly completely untie compensation from the stock price.
Not entirely, they've created a relationship, but it is the opposite of what is normally considered in "line goes up" thinking.
Usually when a company/market does poorly, people don't have a strong reason to stick around as the possible compensation dwindles down.
The stock price on your joining date somewhat controls how many stock items you get. This is mostly luck - your "birth" into the company controls the payout multiple for the next 4 years.
Once the company starts doing poorly, it struggles to justify handing out extra compensation to employees and even if a select few are handed out more stock, it is usually not enough to keep a majority of folks in the building.
So with standard RSU models it'd be a good idea to join a company which is currently rated a BUY, but it is not great to stick around and try to wait for a turn-around if you got RSUs issued in boom times.
The "buy 100k$ every quarter" sort of model flips that thinking around. When the company does poorly, you get to sort of double down your bets on on the recovery path. And if your work pulls off a recovery, then you get rewarded directly for sticking through the bad patch (or if you don't believe in it - sell it the same day you get it and put it in ETFs, but not quit from a pay dip).
Also if the company is "buying" stock with cash intended for an employee instead of issuing it from some pool (also without an RSU discount), then this also has a nice effect of masquerading as a stock-buyback.
So it directly incentivizes people to stick at a company through a bad spot or at least softens that loss of critical talent when the company hits a rough patch without any additional distraction to the board.