December 9, 2022

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Fine Art Of Business

Block Has Been Giving Workers Extra Stock Amid Plunging Share Price

3 min read
  • Block, formerly known as Square, has faced a steadily declining stock over the past six months.
  • Consequently, the compensation of many Block employees has plummeted.
  • Block told employees that it would provide equity refreshes to some who were affected.

Block has been giving some employees more equity after shares of the digital-payments company collapsed more than 60{6e6db3521f07ebedc52abc8c7bfbbc5a7fcd8802a2a8a5c8cfaa0d09c6ebceb7} in recent months, people familiar with the matter said. 

An internal memo sent to staff explained that the company would be increasing “the overall compensation budget” compared to what was initially set in Block’s annual plan at the end of 2021. “We aim to get everyone within the total compensation band for their role so long as they’re meeting or exceeding performance expectations,” said the memo, parts of which were shared with Insider.

Once a year, Block plans a budget that includes salary and increases, one of the people said. Because of the firm’s cratering share price this year, Block notified employees it would reevaluate the budget to include more compensation in the form of an equity refresh.

But not everyone got it.

“It varied greatly, a bit tied to performance increases,” one Block employee told Insider. “So people got raises and more stock all at once, and it was more than they would have normally gotten as a kind of market correction.”

A Block spokesperson said that although the terms “refreshers” and “merit grants” are often used interchangeably, refreshers are automatic renewals given to employees, while merit grants are based on individual performance. The most recent compensation adjustment was considered a merit grant internally.

The recent pay review took place in February, an employee said, and the equity refreshes were received in April, just before Block shares dropped again in early May. A spokesperson for Block confirmed the timing.

Insider previously reported that Block’s stock shock has hammered the total compensation of many of its employees. One Block employee previously told Insider that they lost $172,000 in equity because of the dips, and another employee said they lost $400,000.

“Honestly, this is going to suck way more for new employees who joined during the high because typically the stock grant you get when joining is the highest you’ll get,” a Block employee said.

Another employee said the company gave equity refreshes to some employees at $120 a share. The company’s shares peaked at $290 in August and have been steadily declining for many months. The stock is now trading at about $81.

Additionally, people familiar with the matter told Insider that Block didn’t plan for additional equity grants anytime soon.

“They tell you, ‘We’re paying you in stock, and it goes up, it goes down, and that’s just life. We don’t take the money back from you when it goes up. So we won’t give you more when it goes down,'” a Block employee said. “But on the other hand, if everybody’s leaving, it’s bad for the company, so they try to not do it until they kind of have to.”

Block’s compensation bands are calculated with an internal tool and takes into account the level of employment, the makeup of a team, and salary ranges. Then, the tool provides the manager with a budget based on those factors. Only employees who have fallen out of these bands get a refresh.

A Block spokesperson said employees are free to view their own compensation bands, but equity ranges aren’t available to view because of their dynamic nature.

“We don’t have bonuses. We just have stock that we vest. And every year, your salary may increase, and you may get a new grant,” an employee said. “But it’s usually not much unless you get promoted.”

Are you a tech employee with insight to share? Got a tip? Contact Kylie Robison at [email protected], through secure messaging app Signal at 347-829-5826 or Twitter DM at @kyliebytes.


https://www.businessinsider.com/block-equity-refresh-extra-stock-amid-plunging-share-price-2022-5

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