Here's a totally wild guess. Wikipedia says LinkedIn has 8735 employees. Let's guess that before the crash, employees had an average of $50,000 of stock each. The price is down about 50% the past year.
8735 * 50,000 * 0.5 = $218 million lost by employees.
Do you have any evidence that $50k is an average amount of vested stock held by an employee? If not it might as well be $5k or $500k, doing the math doesn't help much.
So even if it's fully distributed that's about $1500 per member of staff.
Is that exciting? I mean, if you were on minimum wage it might be. Otherwise it sounds like inflation (5% on $30K). How much do LinkedIn employees earn?
They make as much as any Software Engineer in the Bay Area, working for names like Google, Facebook and Apple. So yes, if it is distributed evenly across all employees, it will be negligible.
A $1,500 bonus would be huge to thousands of people working at LinkedIn. For every highly paid software engineer there are dozens of people working in HR / Accounting / Administration / Facilities / Sales earning a fraction of the pay that developers are earning -- with largely the same costs of living.
And it's far bigger work, with far bigger implications and potential unintended consequences. Telling America to just get off of its collective fat asses and walk around more than once in awhile would do more than an infusion into Medicare, but Medicare money isn't nothing for the people who need it.
Ideally, the CEO could/would do more. But just passing it off as a symbolic gesture raises the question: well, if it's so symbolic -- and thus, of no real sacrifice to the CEO, then why don't all the other rich (and far richer) CEOs do it, such that this CEO's offering doesn't make news?
Dozens may be a bit of an exaggeration, but they give a big picture breakdown of their employment ratios in their annual report;
As of December 31, 2014, we had 6,897 employees,
consisting of 2,838 employees in engineering, product
development and customer operations, 2,989
employees in sales and marketing, and 1,070
employees in general and administrative functions.
So even broadly, 60% of the company is definitely non-engineering. From a quick glance at their 10k, it looks like about 1,700 people are in the product development group, so at minimum 75% of the company is non-engineering. Whether it's 1/5 engineers or somewhere closer to 1/10, it's hard to say but it takes a lot of people to run a company, and the majority don't make 'engineer' salaries.
Does it come with the catch that I have to join his professional network? Do people working at LinkedIn have to use LinkedIn? I always wondered the same about Facebook, some awesome engineering challenges but many techies I know, including myself, have zero desire to have a facebook profile
I'd be excited if someone arbitrarily gave me $10 off the street.
My employer giving me a bonus of that amount would be different though, because the nature of the relationship there is very different - I give up a large part of my life to work there.
I'm mostly just asking whether $1500 is significant at LinkedIn - you seem to think I'm making the claim that it's not. Whether it'd be useful for the average person is not that relevant (because it's not applying to them).
This money is going back into the option pool which is used for new grants, its not going directly to the currently employees.
With a 15.7B mkt cap the 14MM represents ~8.9bps, I haven't kept up with his ownership but I remember looking at the S1 and I believe he used to own 4% of the company.
It reads to me he's talking about the pool of equity allocated to this year's grants. At companies like LinkedIn, you receive new grants every year to layer your equity and keep you there past your 4 year mark. Everybody does it differently, but it's usually something like "We have $x in equity comp available, lets do some magic calculation based on base pay and annual review to allocate this between our employees."
Also, I can't speak to this personally but I've heard that LinkedIn offers are heavy on cash, less equity.
I received an offer from them early last year (declined) and cash compensation wasn't any higher than the other offers I had at the time, but the equity was substantially higher.
I wouldn't by default assume some sort of sinister ulterior motive here. There's a fairly good chance this is exactly how it appears: A CEO taking the rather exemplary step of donating an entire year's worth of comp to his employees, in an attempt to offset external impacts that are only nominally within his control.
Sure, there's the possibility this act is purely for optics and employee retention. But if that's what drives people to be good human beings you won't catch me complaining.
And the "worth noting" section in this article is curious as well. Why does any amount of personal wealth degrade the value of this act? It's like the writer is saying "don't be impressed folks, this guy is still rich."
We should encourage and support acts like this, not couch our praise in snark and envy.
I think critically examining these actions can be useful, but cynicism only goes so far. Generosity is a good thing, and him sharing his compensation with employees is something that should be commended.
> Why does any amount of personal wealth degrade the value of this act?
It shows how much of his own lifestyle he is potentially sacrificing.
To take it to the extreme:
if he was giving up all his wealth to his employees, you would treat it differently to if he was giving 0.01%.
Edit: I think this is the most controversial comment I've ever made on HN. It keeps going up and down between -2 and +8..... I wonder why it's so polarising?
Probably polarizing because people believe so differently about giving.
Some believe that "good" giving means giving a large portion of what you have, not a small fraction.
Others believe a gift is good gift, no matter how small.
Others believe a $14mm gift is good because of how large it is, regardless of whether or not it's 0.01% or 100% of his net worth.
Others take offense when people try to dictate theirs or others lives by claiming a kind or charitable act is insufficient because it doesn't put out the giver as much as they should like.
And there are probably other ways to look at it as well.
This sort of debate always crops up when rich people donate money.
My bad, like Six Sigma above said, the guidelines do not include such rule. Since HN evolved /co-evolved with reddit and follows many of the conventions even more strictly, I thought this is also an HN rule. Intuitively, it also makes sense - 'upvoting', or irl aknowledging things you disagree with is how you would aknowledge that you see the opposing argument as valid, and will address the disagreement in a response. As opposed to downvoting, or irl ignoring, comments that fall so far out of scope of civil debate and are not constructive.
Exactly correct, there is the story in Mark 12:43 "Calling His disciples to Him, He said to them, "Truly I say to you, this poor widow put in more than all the contributors to the treasury; for they all put in out of their surplus, but she, out of her poverty, put in all she owned, all she had to live on." which a lot of people learned in Sunday school that teaches the "size" of the gift doesn't count as much as the "sacrifice" of the gift.
Some people internalized that to mean that gifts without sacrifice were worthless, but that was, in my opinion, the wrong take away. Every gift and every kindness has value, regardless of how hard it is to give. Its impact however can be moderated somewhat by the amount of sacrifice behind it.
And as most people also recognize that failing to provide the kindness when the sacrifice is minimal, is its own kind of problem.
The fact that he's already independently wealthy makes this act far less impressive. If it was a first time founder making a humble salary doing this, that would be completely different.
It's not charity, it's a CEO trying to increase staff retention. It doesn't need to be "impressive," but regardless, your cynical view of what constitutes charity is depressing to say the least. Weiner was under no obligation to do anything. He could have taken $14 million and chose not to. The fact that he already has money is irrelevant.
Also, I challenge you to find anyone who has been CEO of a publicly traded company for more than a year who isn't also independently wealthy.
I agree, and I think it's a win/win/win. Employees get a nice moral boost and get to pad their finances a bit, the CEO enables a long term bet on a future substantial gain of his preexisting position in $LNKD equity, and both sides get to feel that this was a nice gesture of good faith.
Even with the potential personal gain, imo there isn't much to criticize here. It's not like a majority shareholder getting a one time special dividend (I'm looking at you, PE funds) or something obviously sinister like that.
Donating to help employee retention is still good. Employees leave when the job is bad. If less leave that means less people are working jobs that they don't like.
It would be cool if more of the senior management with >$5M options did that. If the company prospers they could easily negotiate high rewards again. Its normally the rank and file who get standardized bit-sized options.
Say what you want about LinkedIn as a product, they treat their employees really well. When I interviewed there a few years ago, their interview process was extremely supportive, as opposed to other companies. It really felt like they wanted you to pass their interview, and it impressed me. I didn't take their offer, but I also wonder if that was a mistake or not.
I find it surprising that they can treat their employees so well considering their revenue per employee is relatively low, ~$300,000 if I remember correctly. Regardless, Weiner's behavior does mesh with the feelings I had from the company in general.
How are these numbers calculated though? I want to know how what percentage of these companies' total workforce is outsourced to contractors that are not included when coming up with the above figures. A company may be off loading a large chunk of the work to third parties while getting sweet gains and producing relatively higher per employee revenues.
The logic is that if you outsource your ops team to AWS you have less people but your revenue is still the same, you're just paying AWS instead of salaries.
So if we take the revenue per person number as anything significant then netflix skews that by using AWS.
It would be difficult so no one bothers. How many "people" is monthly use of S3, DynamoDB, RDS, Route 53, etc. equivalent to? Its not easy or worthwhile to estimate. Revenue per employee can be a bit of a vanity metric.
well, the obvious solution is using profit/people rather than revenue/people, isn't it?
EDIT: ah, as another commenter mentioned, it is also true that you might be growing fast with low profit so I guess both measures make sense (or not) in different contexts.
Profit is not always meaningful either. Running at full Op Ex (eg, hiring a larger team) can reduce profit to near zero, but if it leads to growth it's money well spent.
Earnings/employee is a much better metric than revenue. Netflix is higher up because they are primarily reselling, which usually translates to higher revenue and lower margins.
It seems like earnings less cost of goods sold per employee would be a much better way of looking at the value added by employees. I think this would account for things like the AWS example below.
This was a very kind gesture. But there is no way this gift would remotely make up for the value loss experienced by the employees.
According to LinkedIn's site, they have 9,200 employees:
$14 MM stock grant/9,200 employees = $1,521 per employee
In order for this grant by the CEO to fully make up for the amount lost by employees in their recent stock crash, they would have had to have no more than $3,804 of LinkedIn stock ($1521/.40). This seems quite low.
According to LinkedIn's 10-K, LinkedIn has 6.1 MM RSUs outstanding, implying 663 shares per employee. The average amount lost per employee would therefore be:
($272(LNKD high) - $119(current stock price))*663 = $101,439
In other words the CEO's stock gift to employees would only make up 1.5% (1521/101,439) of the total loss from the recent crash.
There are many reasons other than money to work somewhere: how rewarding the work is, how much you enjoy working with your team, and the impact you are having on the world. Those are things that this kind of analysis would not capture.
Definitely a kind gesture from this CEO considering that some people won't even leave a tip when they're served wild caught fish by a minimum wage employee at their favorite restaurant, however, this is a first-world donation. Sure, we shouldn't judge his donation on how much he sacrificed personally, but IMHO it would have more impact to human progress if he actually sold the stock to help refugees that actually are in need of housing, bread, and water.
If what I wrote above doesn't make sense to you, perhaps the following quote will resonate with you: "The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little." -Franklin D. Roosevelt
If the CEO is not sure where to donate to 'provide enough for those who have little', then giving to those that 'have much' and having them make the decisions might actually be a good choice.
I never felt too positive about piling up of money for years/decades to donate it later instead of distributing it among the people in the organization now.
Sure, if you believe in an impactful plan that needs lots of money. But even then I could see arguments against it.
The guy does a good thing and recode is trying to justify that hey it was not a big deal because he already is rich and has a lot more stock!
At one end journalists cry out aloud about how big CEOs are hoarding cash and stock without giving much to employees, and when someone does the opposite you try to justify.
To everyone criticising this or unimpressed by it - let's hope none of you ever becomes a victim of such a despicable act, and let's hope as well that the rest of us don't become less likely to either give or recieve in response to your comments which I find rather misguided.
85 comments
[ 2.7 ms ] story [ 152 ms ] thread8735 * 50,000 * 0.5 = $218 million lost by employees.
So even if it's fully distributed that's about $1500 per member of staff.
Is that exciting? I mean, if you were on minimum wage it might be. Otherwise it sounds like inflation (5% on $30K). How much do LinkedIn employees earn?
That'd be far bigger news.
Ideally, the CEO could/would do more. But just passing it off as a symbolic gesture raises the question: well, if it's so symbolic -- and thus, of no real sacrifice to the CEO, then why don't all the other rich (and far richer) CEOs do it, such that this CEO's offering doesn't make news?
Applaud him for doing something good. $14m is a lot of money for any individual to shell out and $1500 is "exciting" to most normal people.
Why does the YC application ask for your HN username?
I'd be excited if someone arbitrarily gave me $10 off the street.
My employer giving me a bonus of that amount would be different though, because the nature of the relationship there is very different - I give up a large part of my life to work there.
I'm mostly just asking whether $1500 is significant at LinkedIn - you seem to think I'm making the claim that it's not. Whether it'd be useful for the average person is not that relevant (because it's not applying to them).
And the $14 million goes into the grant pool, so it's only accessible by those with grants in the first place.
With a 15.7B mkt cap the 14MM represents ~8.9bps, I haven't kept up with his ownership but I remember looking at the S1 and I believe he used to own 4% of the company.
This is an important but mostly symbolic move.
Also, I can't speak to this personally but I've heard that LinkedIn offers are heavy on cash, less equity.
Sure, there's the possibility this act is purely for optics and employee retention. But if that's what drives people to be good human beings you won't catch me complaining.
And the "worth noting" section in this article is curious as well. Why does any amount of personal wealth degrade the value of this act? It's like the writer is saying "don't be impressed folks, this guy is still rich."
We should encourage and support acts like this, not couch our praise in snark and envy.
It shows how much of his own lifestyle he is potentially sacrificing. To take it to the extreme: if he was giving up all his wealth to his employees, you would treat it differently to if he was giving 0.01%.
Edit: I think this is the most controversial comment I've ever made on HN. It keeps going up and down between -2 and +8..... I wonder why it's so polarising?
Some believe that "good" giving means giving a large portion of what you have, not a small fraction.
Others believe a gift is good gift, no matter how small.
Others believe a $14mm gift is good because of how large it is, regardless of whether or not it's 0.01% or 100% of his net worth.
Others take offense when people try to dictate theirs or others lives by claiming a kind or charitable act is insufficient because it doesn't put out the giver as much as they should like.
And there are probably other ways to look at it as well.
This sort of debate always crops up when rich people donate money.
https://news.ycombinator.com/newsguidelines.html
Some people internalized that to mean that gifts without sacrifice were worthless, but that was, in my opinion, the wrong take away. Every gift and every kindness has value, regardless of how hard it is to give. Its impact however can be moderated somewhat by the amount of sacrifice behind it.
And as most people also recognize that failing to provide the kindness when the sacrifice is minimal, is its own kind of problem.
A perhaps unintentional critique of charity itself.
It's two different ways of looking at charity. "Glass half empty" type of thing.
Also, I challenge you to find anyone who has been CEO of a publicly traded company for more than a year who isn't also independently wealthy.
Even with the potential personal gain, imo there isn't much to criticize here. It's not like a majority shareholder getting a one time special dividend (I'm looking at you, PE funds) or something obviously sinister like that.
I find it surprising that they can treat their employees so well considering their revenue per employee is relatively low, ~$300,000 if I remember correctly. Regardless, Weiner's behavior does mesh with the feelings I had from the company in general.
That's a very odd way of looking at it. Is that because there are entire teams at AWS supporting Netflix, which makes them more like contractors?
So if we take the revenue per person number as anything significant then netflix skews that by using AWS.
Ultimately it's a number without much meaning.
EDIT: ah, as another commenter mentioned, it is also true that you might be growing fast with low profit so I guess both measures make sense (or not) in different contexts.
...provided that the growth leads to more profit at some point in the future.
According to LinkedIn's site, they have 9,200 employees:
$14 MM stock grant/9,200 employees = $1,521 per employee
In order for this grant by the CEO to fully make up for the amount lost by employees in their recent stock crash, they would have had to have no more than $3,804 of LinkedIn stock ($1521/.40). This seems quite low.
According to LinkedIn's 10-K, LinkedIn has 6.1 MM RSUs outstanding, implying 663 shares per employee. The average amount lost per employee would therefore be: ($272(LNKD high) - $119(current stock price))*663 = $101,439
In other words the CEO's stock gift to employees would only make up 1.5% (1521/101,439) of the total loss from the recent crash.
There are many reasons other than money to work somewhere: how rewarding the work is, how much you enjoy working with your team, and the impact you are having on the world. Those are things that this kind of analysis would not capture.
That’s because, according to a LinkedIn spokesperson, Weiner is forgoing his annual stock package so that employees can have it instead.
Huge kudos CEO taking responsibility (even though its probably not his fault) while making sure employees don't get impacted.
Were these options exercised? Does Jeff benefit from not having to pay taxes on the paper gains he would have realized had he kept these to himself?
Jeff is a great guy but I personally do not think that this act really means anything substantial for the employees.
If what I wrote above doesn't make sense to you, perhaps the following quote will resonate with you: "The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little." -Franklin D. Roosevelt
I never felt too positive about piling up of money for years/decades to donate it later instead of distributing it among the people in the organization now.
Sure, if you believe in an impactful plan that needs lots of money. But even then I could see arguments against it.
At one end journalists cry out aloud about how big CEOs are hoarding cash and stock without giving much to employees, and when someone does the opposite you try to justify.