(Toronto) The instability in the tech sector has companies thinking about reviewing employee equity programs.
Posted at 4:48 p.m.
For example, the share price of Ottawa-based Shopify lost about 80% of its value after hitting a high of $222.87 at the end of 2021.
“If you’re in your early twenties and you’ve never worked in a start-up business, you had to think that you could afford a cottage, and then everything fell apart after a few months. . It can be quite stunning,” notes Chris Albinson, CEO of Communitech.
The reversal of global trends dampened investor enthusiasm.
Several companies in the technology sector, such as Shopify, Netflix, Wealthsimple and Clearco, reacted by laying off several employees and warning their staff that this new frugality aims to lessen the impact of a possible recession.
This transition must have turned many heads among these workers accustomed to dream conditions.
“A year ago, someone could have been recruited by offering them a low base salary and a high number of shares in the company. I don’t think that’s the case today,” said Natalie Romero, who worked at Shopify for four years before being laid off along with around 1,000 colleagues in July.
“Equities aren’t as attractive as they once were,” she adds.
Shopify seems to have realized this. Its “new reward system” giving employees the option of choosing between cash or stock will come into effect on 1er September, said company spokeswoman Jackie Warren.
Other companies may well follow suit.
Think Research has been considering changing its policy of offering shares for over a year. Sachin Aggarwal, its chief executive, believes that this will allow the company to “better defend its place in the market”.
Big names like Google and Amazon have such a global presence that they can offer better salaries to recruit or retain employees. This liquidity is not necessarily the prerogative of smaller companies like Think Research, which must bet on their actions to attract talented workers.
And when the market swings, the supply isn’t as compelling.
“When the stock price goes up, the perception that people have of your market value improves. And when your stock goes down, so does the perception among qualified employees,” says Aggarwal.
And some players must have regretted their investments in companies in the technology sector. Thus, Power Corporation had acquired 24% of the shares of Wealthsimple. The value of this stake was 925 million in March. Today, it has decreased to 492 million.
“Some invest in companies in the consolidation phase as if they were growing at the same rate as when they started. It was probably unrealistic in retrospect, believes Nic Beique, founder of the firm Helcim. We are currently witnessing a period of contraction and revaluation. This causes companies to reflect on their action programs and examine their metrics. »