Despite multiple rounds of layoffs over the last year, management compensation at Shopify (TSX: SHOP) appears to have been largely unaffected.
In a regulatory filing made early this morning, Shopify revealed that CEO Tobias Lutke collected just over $20.0 million in total compensation in 2022, on par with the $20.0 million he collected in 2021, and an increase over the $15.1 million he made in 2020.
While many will be quick to state that nearly all of Lutke’s compensation was in the form of option-based awards – he only collected $1.00 in formal salary for both 2021 as well as 2022 – it should be noted that significant gains have been made on these option based awards.
Lutke saw his options issued in four separate tranches, with exercise prices ranging from $18.04 to $128.03 per share. Based on Thursday’s closing price of $78.67, Lutke has seen unrealized gains of approximately C$23.2 million on those options, implying that despite “lowering his salary” to just a dollar, he’s made significantly more as a result of his options awards than he would have if he collected a regular paycheck.
Chief financial officer Jeff Hoffmeister meanwhile collected $8.2 million in compensation, despite being in the role for just the final two months of the year, while outgoing CFO Amy Shapero collect $10.8 million, a portion of which was related to severance.
The only exec to see a decline in compensation was Kasra Nejatian, who’s compensation fell from $23.8 million to $16.9 million in 2022, a result of fewer option based awards being granted. Outgoing COO Toby Shannan meanwhile claimed the top spot in terms of compensation, at $20.5 million.
The eye-popping compensation for executives follows the firm in July of last year laying off 10% of its workforce, which was expected to impact roughly 1,000 employees, which came just months after Lutke secured 40% of voting control over Shopify under a structure that allows him to sell stock while still maintaining his ownership percentage.
And the layoffs have yet to stop. The company just weeks ago revealed it would cutting a further 20% of its global workforce while cutting its fulfillment network.
“There’s no way to make this good news, but we designed a package that will attempt to make it the best possible version of a bad day,” Luke said of the announcement.
Shopify last traded at $79.59 on the TSX.
Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.