Is it normal for companies to change their compensation package after starting?

23 points by thatkindagal 5 years ago | 23 comments

I started in 2020 and my offer letter had my salary and an amt of stock for me to vest..This is a public company..A few months after I signed , they significantly reduced the amount of stock to grant me by about 50 %..Company cited that it would not be fair for other employees because stock price had fluctuated too much in my favor..Legally I cant do anything bc my offer letter said RSU grant was at the discretion of the board..I was told to wait and someone would fix this but I have given up hope now..I have never worked at a large company before..Is this normal behavior at large companys ?

comp_throw7 5 years ago |

Contrary to other replies, this is not remotely normal. Make sure you aren't misunderstanding the terms of your offer: some companies will say $x dollars worth of stock, with stock price determined by e.g. a 90-day running average. If there's a clause like that, and the stock went up so much since you joined (or signed the offer letter, depending on the terms) that the average price over the last 90 (or whatever) days is 2x higher than it was initially, then there's nothing shady going on.

If they didn't specify how they're determining a stock price to derive a # of shares from, or if they actually specified a number of shares rather than a dollar amount, then no, that's not normal. Get out and go somewhere else that doesn't play stupid games.

thatkindagal 5 years ago | |

The terms were very clear..30 day avg for $x worth of stock so it was very easy to calculate what it shuld have been..

they changed the avg in their favor afterwards bc we joined on covid dip..

comp_throw7 5 years ago | | |

Make sure you know if it's a 30-day average starting from date of signing, join date, or date of board approval (haven't seen the last one before, but who knows). If it doesn't match any of those, then yeah, it's bad.

anonuser123456 5 years ago |

RSUs are a way for companies to mitigate compensation risk. When times are bad and the stock is down, so is your pay. It comes as the cost of higher compensation when times are good.

I do not think this is normal and appropriate. The board would have no problem paying you less if the stock declined.

Management that goes back on its agreements is not a management that you want to work for.

shoo 5 years ago |

Your best option may be with other employers with more enlightened management and an appropriately large budget for retaining your valuable services.

Your current employers demonstrated that they are not willing to honour the spirit of the original contract they negotiated with you. Sure, they have some clause such that RSUs grants are awarded at the board's discretion, so perhaps they're off the hook legally. But similarly you can just terminate your employment and stop working for them if the deal is now not attractive.

That said, if you are still getting paid more working for this company than other employers, quitting for another job might not be your best move.

Can you compare what you are getting paid with other employees in similar roles who joined at different times? It is possible you may be getting under paid anyway.

shakkhar 5 years ago |

No this is not normal. The important thing you need to decide is whether you want to drag this through the legal process or simply cut your losses and move on. To get a lawyer to pursue this seriously may cost thousands. Either way, I think you should quit at your earliest convenience. Bad employers don't turn good if you stick with them long enough.

ganoushoreilly 5 years ago |

Just because they say at board discretion, doesn't mean they can just arbitrarily recall your original offer (whatever the terms were). Speak with a local lawyer in your Jurisdiction. It's most definitely not normal behavior in any company.

nibsfive 5 years ago | |

This is not true, it really is at board discretion. Generally speaking many companies hesitate to even put stock offers in writing because of stuff like this. Whether they can do it legally (they can) and whether it's okay (it's not) are different here.

giantg2 5 years ago |

Yes, this is fairly normal.

I work for a big company that has a reputation for doing the right thing, which might have been true in the past but doesn't seem to apply now. I have seen them change grade structures, change promotion amounts, and change the pay/bonus structure all to the employees detriment. They always try to put some positive spin on it. I remember I brought up the topic of a raise with one boss because I was low in the pay scale for that grade. His response was that this was a good thing because it gave me room to grow. Seriously? I'd rather be near the top of the scale and not grow very much. Same thing for when we used to be able to count on 3 10% promotions but then they changed it to 4 7% promotions to get to similar compensation (it's actually below because the bonus isn't as good, not to mention it takes years longer to hit that 4th level).

giantg2 5 years ago | |

Why downvote?

rmk 5 years ago |

It's a bit scummy but I doubt you can do a whole lot about it. Companies like Stripe are doing a variant of this where the number of shares that vest will be dynamically adjusted every year based on a target value dollar number. The question is, will they grant you more shares than offered if the stock value goes below that you joined at? Can you get an answer to that in writing? If so, it may be worthwhile to stay, because you essentially make a guaranteed amount of money in the form of equity every year.

EDIT: This is very unusual for large public companies. This is the first time I have heard of such a practice.

batmaniam 5 years ago |

This is ridiculous. You joined at a lucky time, that should not be counted against you. I mean, that's what all stock is, right? A gamble, and you won the pot on your first try. If company's stock went down, do you think they would have readjusted your base salary to match? Don't think so.

This is just another one of those tricks that companies do to try to boost your base compensation, but without putting the actual money in. Cash will always be king, always prefer it against RSUs.

GianFabien 5 years ago |

YES. In 7 years with a company that got acquired by another and then eventually liquidated, my T&Cs changed about 5 times. I didn't have shares, but had a large profit share component which was fiddled with constantly. I think you should read Heidi Roizen's blog https://www.heidiroizen.com for some more examples.

Perhaps you should look at the big picture. Are your earnings above average? Was the stock grant the only reason you took the job? If you start legal action or make a lot of noise, your career will probably hit some roadblocks at that company and possibly others if the news gets out in the open.

toomuchtodo 5 years ago | |

This is terrible advice. The “big picture” is that OP was lied to and is defrauded out of comp that was agreed to.

Trias11 5 years ago |

Stock track record is clear and public and trackable. You have an option to wait until they make it right on it.