(Toronto) Instability in the technology sector is prompting companies to consider reviewing employee share plans.
Posted at 4:48pm
For example, Ottawa-based Shopify’s stock price lost about 80% of its value after peaking at $222.87 in late 2021.
“When you’re in your early 20s and you’ve never worked in a start-up company, you had to think you could afford a cottage, and then after a few months it all fell apart. . That can be pretty impressive,” notes Chris Albinson, CEO of Communitech.
The global trend reversal dampened investor enthusiasm.
Several companies in the tech sector, such as Shopify, Netflix, Wealthsimple and Clearco, have responded by laying off several employees, warning employees that this new austerity is aimed at cushioning the impact of a potential recession.
This transition must have turned many heads for these workers used to dream conditions.
“A year ago someone could have been recruited by being offered a low base salary and a large 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 fired along with about 1,000 colleagues in July.
“Equities aren’t as attractive as they used to be,” she adds.
Shopify seems to have recognized this. The “new rewards system,” which allows employees to choose between cash and shares, will go into effect on January 1ah September, company spokeswoman Jackie Warren said.
Other companies could follow suit.
Think Research has been considering changing its stock offering policy for over a year. Sachin Aggarwal, its chief executive, believes this will allow the company to “better defend its position in the market”.
Big names like Google and Amazon have such a global presence that they can offer better salaries to hire or retain employees. That liquidity isn’t necessarily the prerogative of smaller companies like Think Research, which must rely on their actions to attract a talented workforce.
And when the market fluctuates, the offer isn’t that compelling.
“As the stock price goes up, people’s perception of your market value improves. And when your stock goes down, so does the perception of qualified employees,” says Aggarwal.
And some players must have regretted investing in companies in the technology sector. The Power Corporation had acquired 24% of the shares in Wealthsimple. The value of this holding was 925 million in March. Today it has dropped to 492 million.
“Some invest in companies in the consolidation phase as if they are growing as fast as they did when they started. In retrospect, that was probably unrealistic, believes Nic Beique, founder of Helcim. We are currently experiencing a phase of contraction and revaluation. This prompts companies to reflect on their action programs and review their metrics. »