Gurley argues zero-based RSUs allow management to capture 80% value while shareholders lose 20%, showing misalignment.
“And here's where we get into questions of alignment with shareholders, because you could theoretically have a management team that leads a company, you know, over a year to a 20% decline and pick up 80% of the value of their equity award.”
Gurley notes Microsoft hands out $11 billion annually in RSUs, giving them advantage in recruiting AI talent.
“So that's over 11,000,000,000 a year. And this morning we woke up and read about them taking some employees from a hot AI company in the valley.”
Gurley notes Microsoft hands out over 11 billion dollars annually in RSUs to compete for AI talent.
“And when you're handing out 11,000,000,000 a year in RSUs, you know, you've got a lot to play with.”
Gurley highlights Netflix's unique compensation letting employees choose between options or cash with no RSUs.
“Netflix today has a remarkably unique compensation structure. No one does anything like them. But today, if you're an employee, you get to choose either options or cash.”
Gurley explains a large investor pushed for zero-based RSUs believing one RSU equals 2.5-3 options to reduce dilution.
“This particular investor in this very large public Internet company felt that if they move to zero based RSUs from options, and this gets into a technical detail around Black Shoals, that, you know, there's an argument from Black Shoals that a single RSU is worth about two and a half or three options.”
Gurley cites Gary Steele cutting stock participation from 87% to 15% at Splunk.
“And he said, you know, in a very short window, he went he he said he took stock, participation from 87% to 15.”
Gurley says zero-based RSUs let management capture 80% of equity value while shareholders lose 20%.
“you could theoretically have a management team that leads a company, you know, over a year to a 20% decline and pick up 80% of the value of their equity award.”