Why getting paid in stock options could be a good idea
by Alberta Venture Staff
Allan Markin retired in April of this year as the chairman of Canadian Natural Resources, the company he spent 23 years helping grow from a tiny oil and gas play into one of North America’s most successful energy companies. And while other executives might talk about how much they believe in their companies, Markin put his money where his mouth was. During his last three years with the company, he collected the majority of his compensation – which ranged from $5.9 million in 2011 to $12 million in 2010 – in the form of CNQ shares.
With those shares trading at $30 in early August (down from a high of almost $50 in early 2011), that may not look like a particularly wise decision. That doesn’t mean you shouldn’t do it if presented with the opportunity. In the right situation, it could be the best decision you’ll ever make. It certainly was for these two people.
William Shatner is about as famous as they come in Canada, but it wasn’t that long ago that the former Star Trek and T.J. Hooker star was doing shows like Rescue 911 and looking like a has-been. In the late 1990s, he signed on to do commercials for Priceline.com, a website that offered discounted rates on flights, hotel reservations and other travel-related products. Instead of taking a salary, he took options in the fledgling company. In 1998, he was awarded a warrant that allowed him to purchase as many as 125,000 shares in the company at a heavily discounted rate. It paid off: Priceline stock took off, and Shatner reportedly dumped most of his holdings before the first tech bubble popped in 2001 and continued to collect his compensation in stock as its share price recovered.
When Facebook opened its first office in Palo Alto, California, in 2005, then-president Sean Parker asked graffiti artist David Choe to paint some murals on the walls. Parker offered Choe the choice between a few thousand dollars in cash and the equivalent value in Facebook stock (which, at the time, was traded privately). Choe reportedly thought that the idea behind Facebook was “pointless,” but he still chose the stock. Why? He hasn’t talked to the media about his decision, but in a self-titled book featuring his art (including the murals at Facebook HQ) he offers this piece of advice: “Always double down on 11. Always.”