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 Fortune 500, was founded more than a decade ago by Jack Dorsey, who serves as chief executive. It operates payment processor Square, money transfer app CashApp, music streamer Tidal, and the layaway payments platform Afterpay. The pilot program follows a time of transition for Block. In November 2023, the company said it expected to reduce the size of its overall workforce from just over 13,000 people to 12,000 by the end of 2024.

Financial flexibility

According to Ahuja, Block aspires to offer economic empowerment by giving customers flexible options for their financial lives. These include a range of payment plan options in Afterpay, different lending options for sellers using Square or allowing Cash App customers who deposit their paycheck the choice to split between cash, 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.

Sheryl Estrada
sheryl.estrada@fortune.com

Leaderboard

Darren Myers, CFO of Algonquin Power and Utilities Corp. (NYSE: AQN), is departing the company. Myers will remain as CFO through the reporting of the company’s fourth quarter 2024 results. He joined Algonquin in August 2022. The company will conduct a search for his replacement.

Ryan Spohn, CFO of Sikich, a global professional services company, has assumed the title and additional responsibilities of chief operating officer (COO), effective Jan. 1. He also serves on the company’s Board of Managers. Spohn’s COO appointment will provide enhanced strategic alignment between financial strategies and operational goals, according to the company. Spohn has served as CFO of Sikich for the last six years.

Big Deal

The analytics and advisory company Gallup has released its most recent annual update of U.S. employee engagement. The research found that employee engagement in the U.S. fell to its lowest level in a decade in 2024, with only 31% of employees engaged. This matches the figure last seen in 2014. And the percentage of actively disengaged employees, at 17%, also reflects 2014 levels, according to the report.

There are 12 engagement elements that Gallup measures. Those that saw the most significant declines in 2024 include: clarity of expectations; feeling someone at work cares about them as a person; and someone encouraging their development. The drop in employee engagement in 2024 was most pronounced for workers younger than age 35, according to Gallup.

Going deeper

“Can AI Predict the Future?” is a new article in Wharton’s business journal that highlights the research of Wharton management professor Philip Tetlock. He finds that combining predictions from multiple artificial intelligence systems, known as large language models, can achieve accuracy on par with human forecasters. 

“What we’re seeing here is a paradigm shift: AI predictions aren’t just matching human expertise—they’re changing how we think about forecasting entirely,” Tetlock said.

Overheard

“The Walmart of today is very different than the Walmart of 2008, the last time we made a change in the brand identity. We are more modern, we are more digital.”

—Walmart U.S. chief marketing officer William White told Fortune in an interview regarding Walmart making its first logo change in nearly 17 years. The change includes thicker lettering on “Walmart” and broader stems for the yellow sunlike spark graphic that goes with it.