Good morning. A major fintech like Block is fueled by top talent, and it is determined to keep that talent—which is why the company is offering a new compensation option.
Block’s Q1 performance rewards to employees have historically been four-year equity grants. But the firm's new compensation choice policy allows employees to choose between stock compensation or cash, Amrita Ahuja, CFO and chief operating officer at Block, told me. They can choose a mix, or opt for entirely cash or equity.
“The comp program is about attracting and retaining great talent who are interested in making their own choices on how they're compensated,” Ahuja said.
It’s a pilot program, which Block expects will impact 80% of its roughly 12,000 of its employees. It was announced this past week, and employees will receive more details in the weeks to come, Ahuja said.
“Jack, our CEO, was really the architect and champion behind this program,” Ahuja said. “We started talking about it last year.”
Block, No. 186 on the bitcoin, or stocks. Block employees would in essence have a similar flexibility when it comes to their Q1 performance rewards compensation, she said.
As the CFO, Ahuja explained that at Block, the Rule of 40, a financial metric used to assess the performance of a software company, is configured by gross profit plus adjusted operating income margin, which creates a stable foundation for the compensation program.
Block’s adjusted operating income (OI) margins grew by 15 points in the first three quarters of 2024, driving over a billion dollars more of adjusted OI, versus the same period in 2023, Ahuja said. Block reports its Q4 2024 earnings on Feb. 20.
“In terms of the employee compensation program, if we're looking on an OI basis to measure ourselves, stock-based compensation [SBC] and cash are apples to apples,” she said. Block is able to give employees the option to choose between cash and SBC because “we see them as equally true costs,” she said.
When it comes to bringing in new top talent, I asked Ahuja what qualities she looks for in a potential hire.
"One quality is someone who is continually raising the bar," she said. And the other quality is around creating energy—a person with the ability to inspire others, she explained. "Someone who you're excited to actually sit down and talk to and brainstorm with," Ahuja said.
"When I see people at Block who have those two qualities, they're generally people who are succeeding at the company," she said.
