Could Wayfair chief executive Niraj Shah be in line for $1 billion payout over the next decade?
Sure looks that way — if Wayfair stock can hit some pretty high milestones.
Shares in the online home furnishings seller have nearly doubled so far this year, rising around 90 percent into the $85-dollar range as Shah’s leadership team brings the Boston company back to profitability. But the stock is still a far cry from the $300-plus range in which it traded in 2020 and 2021. Investors saw it as a smart pandemic-era bet when everyone was stuck at home, ordering items on their phones or computers instead of shopping in physical stores.
The board this month approved a payout plan for Shah that would deliver tranches of restricted stock if Wayfair shares rise to certain levels, within specific windows of time. For example, Shah would get 1 million shares if the stock price exceeds $176 within the next six years, and another million shares in shares exceed $290 within the next seven years.
For Shah to really hit the jackpot, Wayfair’s stock would need to climb by many multiples. Shah collects the ultimate prize of 5 million shares if the stock rises to $679 within 10 years. The size of the potential payout is impossible to know today, though it could easily clear $1 billion over that time.
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Shah and Steve Conine, company co-founders and co-chairs of the board, already rely heavily on the stock’s performance for their compensation.
Conine addressed Shah’s massive potential payout, the first of its kind for the company, in a Sept. 19 email to staff, as well as why he isn’t receiving something similar. Conine reminded employees that he stepped back from the chief technology officer role in 2015, and has generally tried to make way for a new generation of company leaders, making him far less involved in the day-to-day operations now. He also noted that the award indicates the board wants Shah to stick around for the next decade. (The two college friends are both in their 50s.)
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The reward for Shah, he said, won’t affect employee compensation, and is intended to emphasize long-term accountability over short-term rewards.
This is an installment of our weekly Bold Types column about the movers and shakers on Boston’s business scene.
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.