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Is now a good time to get paid in stock?

OK, so the way things are going you might not have much choice in the matter. But let's assume, hypothetically, that you do have a choice: is now a good time to get 75% or more of your bonus in stock?

Bank stocks are off anything from 40% (Goldman) to 72% (UBS) and 77% (Morgan Stanley) and are likely to fall further following the untimely demise of TARP.

If you're feeling optimistic, therefore, now might be a good time to get paid in paper. If you're not, now might be a good time to get paid in gold. Unfortunately, the latter is not an option.

Ingots or uptick? You tell us below.

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AUTHOReFinancialCareers UK Insider Comment
  • Do
    DominiConnor
    30 September 2008

    A big problem with being paid in stock, in *any* market is that it is a poor diversification of risk.
    If you think of the time that your firm is most likely to dump you, it is when the stock price is doing badly. So at the point when your cash flow drops hard, you are also not going to get a good price for your shares.

    It's worse than that...
    Most share schemes are loaded with clauses that mean if you quit when times are good to go somewhere else you may well lose some of the stock you have been "paid".

    Thus stocks are not ideal in the case of a good market when you leave or a bad one. The cases in between are not that good either.

    But there is favourable tax treatment, but a business case built upon tax management is typically not as good as it might be.

  • Sm
    Smiley
    30 September 2008

    You'll be lucky if you get paid at all ...

  • Ai
    Aidanp
    30 September 2008

    i disagree, u my friend need a brain shake. it depends upon the sector in which you work, the dividend on offer, the fees, if any for buying the stock, and of course whether or not you believe your stock is under or over valued, i would also think about the length at which you will be working for the company, if it is longer than 2 years then the gains could be considerable, if not STAY AWAY FFOM THE STOCK OPTION.... its all depends whether or not your company will survive the nuclear fall out, which is only just beginning in Asia and Europe. Think of the growth you may get, the timescale for entry and exit and your risk profile.

  • PJ
    PJ
    30 September 2008

    Now is NOT a good time to be paid in stock - unless you happen to be delusional enough to think this will end any time soon.

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