The true value of stock in a high-growth company like Wise
At Wise, all our employees have a share in our mission and the responsibility to make our product a success. Stock is one of the ways we share the value of our growth and is a key part of our compensation package.
We’ve grown into a $5 billion company with 10 million customers in just ten years. And our hyper-growth isn’t coming to an end anytime soon. So what does this mean for our stock offer? If you’re thinking of joining Wise, this blog answers your most frequently asked questions.
This guide covers:
- What stock options and Restricted Stock Units (RSUs) are
- The value of Wise stock
- How exercising stock options works in practice
- Stock FAQs
- Glossary of terminology
First off, what are stock options?
Note: We offer stock options to all employees except US taxpayers. If you’re a US taxpayer, we offer Restricted Stock Units. Skip to the section below to read more about these.
Stock options are a right to buy and sell a specific number of shares in a company’s stock at a predetermined price (strike price 1) over a fixed time period (vesting period 2).
Ownership of a company is broken down into shares. When you receive shares, you become part-owner of that company’s success.
A share in a company is like one slice of a cake. All slices are equal. A stock option is the chance to buy a slice of that cake at an agreed price at some point in the future.
At Wise, the amount of stock you get is set by your role and level. As you progress in your career and increase your impact, you can get more stock options.
What are Restricted Stock Units (RSUs)?
Note: RSUs are offered to US taxpayers only (no matter where the job position you apply to is located).
RSUs are similar to stock options but are a more tax-efficient way for US taxpayers to get their stock package.
Employees don’t need to purchase the slice of cake (RSU) like they do with stock options. Instead, the RSUs are automatically converted to shares and given to employees over time once they have vested and there’s a liquidity event.
What’s the value of Wise stock?
Our stock’s value is driven by how much our investors are willing to pay for each share at a liquidity event.
Wise is not a publicly-traded company. We’re a private company 3. This means there’s no market for employees to sell their stock on a daily basis like is the case with public companies.
Instead, liquidity events such as a secondary sale 4 create a market where employees can sell their shares. We can’t guarantee when these events happen, but so far, they’ve happened every year for the past three years.
As a private company,
- We can’t talk about the exact monetary value of stock before someone is an employee
- The opportunity to sell stock comes with a liquidity event, for example, a secondary sale (a sale of shares to external private investors) or an Initial Public Offering (IPO) 5. When such an event is announced, employees can sell some of their stock for cash, if they want to.
Even though we can’t publicly talk about our stock’s monetary value, we can give you examples of stock value growth from the past (see graph below). You can see how much the valuation of Wise has grown over time.
Growth of the value of Wise stock over time
As a guide, in May 2019, Wise raised an additional $292 million through a secondary sale at a valuation of $3.5 billion (making us the most valuable FinTech startup in Europe at that point!). In July 2020, we had another secondary sale raising a further $319 million, with the valuation increasing to $5bn. That’s 43% growth in just a bit over a year.
How does it all work in practice?
Stock is a long-term incentive — we want our employees to stick with us on our mission. So we have a 4-year vesting schedule with a one year cliff 6. This means you have to work at Wise for at least one year to have any vested stock that you can exercise and/or sell at a later day.
The life cycle of stock options
The life cycle of Restricted Stock Units
Let’s imagine a potential scenario
Sam was hired in 2017 and was granted £15,000* value of stock with a strike price of £0.00001 per share. The indicative value of a share at the time of grant was £30, so Sam was granted 500 stock options (15,000/30).
In 2019, Sam vested 50% of their stock options when there was a secondary sale. They sold 20% of their available stock options in the secondary sale. They’d vested 250 stock options at the time so they sold 50 shares.
In 2019 each share was worth £70 – they’d more than doubled in value in 2 years! This meant that when Sam sold their 50 stock options, they received c. £3,500 (before tax and other costs).
*The total amount is without tax — taxes will always depend on the country the employee is located in.
Note: All the numbers in the above example are hypothetical
Other Frequently Asked Questions we get about stock
How much stock do you get?
This depends on your role and responsibilities. If you’re applying to Wise and are successful (congratulations!), you’ll learn about the amount and expected value of your package when you get your job offer.
How often does Wise grant stock?
Our stock package is for 4 years. We don’t do annual stock grants. This means that you get the full upside of the stock from year 1.
Do you get more stock if you’re promoted?
The amount of stock given is set by role and level. So if you progress in your career and increase your impact at Wise, then sometimes more stock is granted, depending on your role and responsibilities.
When can you sell your stock?
For most employees, it’s only possible to vest RSUs or exercise stock options when Wise organises a liquidity event such as a secondary sale or a public listing. For example, our employees recently had the chance to sell part of their stock package during our 2019 and 2020 secondary sale events.
How long do you have the stock for? Can I keep it after I leave Wise?
Stock grants are for ten years. When you pass your one year anniversary, you can keep your vested stock options, even if you leave Wise. If you leave Wise within your first year, you’ll lose your stock options.
What about taxes and stock?
Stock options are usually taxed in a similar way to other taxable income. The taxing point can be at grant, vesting, exercise, sale or when changing your tax residency. In most countries, you don’t have to pay any tax until you can exercise and sell your stock options. Exceptions can happen when you relocate or do remote work.
The tax an employee has to pay depends on their tax residency, so it’s worth doing your homework. It can get a little complicated sometimes, and that’s when it’s time to see a tax advisor.
Do I have to buy out my shares if I leave Wise?
No. You’re able to keep all your vested options or RSUs and exercise or sell them when there is a liquidity event, for example, a secondary sale or an IPO.
1 Strike price (also known as the exercise price): A fixed price that the owner of a stock option (a Wise employee) can buy or sell an option.
2 Vesting period: The time an employee has to work for the company to earn the stock options or Restricted Stock Units. At Wise, we have a four year vesting period, which means our employees earn their stock option/RSU package incrementally over four years.
3 Public vs. private company: Privately held companies are owned by founders and private investors (including employees). A public company sells all or a portion of itself to the public via an Initial Public Offering (IPO), which means that shareholders have a claim to part of the company’s assets and profits.
Wise is a private company. This means that there’s no market for employees to sell their stock on a daily basis like is the case with public companies.
4 A secondary sale is a liquidity round within a privately held company, that allows for existing and typically early investors to sell part or all of their shares to new investors.
5 Initial Public Offering (IPO): The process of offering shares of a private company to the public in a new stock issuance (Investopedia, 2021).
6 One year cliff: To earn any stock options from working at Wise, our employees need to work here for at least one year. After a year, they’ll have vested the first 25% of their option/RSU package. After this cliff, the rest of their package will be vested incrementally until their four year Wise anniversary.