Kaz Nejatian, COO of Shopify, speaks at the Collision conference in Toronto, on June 28, 2023.Chris Young/The Canadian Press
The best-paid Shopify Inc. SHOP-T executive is a relatively new face in the leadership suite: Kaz Nejatian, chief operating officer since September, 2022, who has earned US$116.7-million over the past three years.
The figure includes US$76-million in total compensation in 2023.
The pay, which came largely through stock and option awards, is nearly twice the US$60-million chief executive officer Tobias Lütke made from 2021 to 2023 and nearly five times the US$24.9-million president Harley Finkelstein received. (Shopify gave Mr. Lütke stock awards in February of this year that it valued at US$150-million.)
Mr. Nejatian arrived at Shopify in September, 2019, as a vice-president and general manager of Shopify Money, a team that developed various payment systems for the company’s customers. Previously, he’d spent less than two years at Facebook as a lead product manager and five years running his own payments company, Kash.
Before his years in the tech industry, however, Mr. Nejatian spent an eventful two years in Canadian government. Serving as director of multicultural affairs for then immigration minister Jason Kenney in 2011, he used Mr. Kenney’s MP-office letterhead for a political fundraising appeal. He accidentally sent the fundraising package, including a presentation on Conservative Party strategy, to an NDP MP.
Mr. Kenney fired Mr. Nejatian in March, 2011, then apologized publicly and rehired him in May, 2011. According to Mr. Nejatian’s LinkedIn profile, he left government work – and Canada – in November, 2012.
Mr. Nejatian earned a salary of US$800,000 in 2023 and no cash bonus, since Shopify’s top executives have no annual incentive plan.
In mid-December, Shopify awarded him 516,529 shares of restricted stock, which vest in chunks on the first through third anniversaries of the grant. Shopify valued the grant at US$37.7-million.
Shopify also awarded him 955,171 options, which it valued at US$37.5-million. The options have an exercise price of US$72.60.
In its management information circular, Shopify says the compensation committee of its board of directors made the stock awards “to ensure Mr. Nejatian is focused on fostering sustained performance and increasing shareholder value over an extended horizon.” The committee considered “market data, the scope of Mr. Nejatian’s responsibilities and impact on our business, and his existing equity award holdings” in setting the size of the award.
For many years, Shopify stock options were a money machine as the company’s shares rocketed ever higher. In the six and a half years from the May, 2015, initial public offering to its September, 2021, high, Shopify stock rose 6,268 per cent. Mr. Lütke, the company’s founder, was at one point among the richest Canadians in the world. (Even today, the stock he holds in the company is worth US$4.8-billion.)
The company has retreated from those lofty heights. With Shopify’s 18-per-cent plunge last Wednesday, after releasing weak financial guidance numbers, the shares are down 63 per cent from their all-time high.
Shopify stock remains volatile: It was the second-best-performing stock on the S&P/TSX Composite Index last year, with a return of 124 per cent, according to S&P Global Market Intelligence. After Wednesday’s tumble, it’s sixth from the bottom for 2024.
More than two-thirds of the options Mr. Nejatian has received from Shopify, including the grant made in December, are out-of-the-money. That means the exercise price is higher than the current market price and there is no money to be made by exercising them. His options expire between 2029 and 2033, however, giving him time for Shopify’s stock to recover.
But other options remain profitable. At Friday’s New York Stock Exchange trading prices for Shopify of around US$60, his options have unrealized profits of US$10.1-million. He also has 608,152 shares of unvested restricted stock, worth US$36.5-million, and owns 189,501 shares, worth US$11.4-million, outright. Altogether, the three securities are worth just under US$58-million.
David Milstead