July 9 (Reuters) – Robinhood Markets Inc (HOOD.O)’s stock trading program gives its billionaire founders four years to reach stock price targets that generate $ 1.4 billion worth of stock. reviewed it.
The company agreed to award CEO Vladimir Tenj to CEO Beiju Bati with 13.8 million shares, which depend on the initial public offering (IPO) of certain stock prices. interviews.
Robinhood changed the terms of the stock rewards in late May, so the founders will get a second chance to get a share if the IPO price does not meet the thresholds set by the plan.
The change could cost Robinhood about $ 569.1 million in temporary accounting expenses, according to one of the փորձագետ compensation experts. The company has made a change in the “promotion of incentives” program of the share award program, the document says.
Sarah Anderson, program director at the Institute for Political Studies, whose research focuses on executive pay inequality, says Robinhood’s IPO will increase the fortune of 34-year-old Ten and 36-year-old Bath’s share of the company. : The terms of the share award for their subsequent award were questionable.
“Once you’re a billionaire, how much more motivating will it be for you to do a good job,” Anderson said. Forbes estimates Teng և Bhat’s fortune at $ 1 billion each.
A Robinhood spokesman declined to comment or make available Tenn և Bhat.
Under the original plan, Robinhood would have cost at least $ 30.45 per share at the IPE IPO to acquire some of the shares, according to documents և executive compensation experts. It was to be worth $ 101.50 per share for Tenև և Bhat to receive the full $ 1.4 billion stake each.
Robinhood has not yet revealed the target range of its IPO prices, but the document states that its board has decided that the real value of its shares at the end of December was $ 16.33. Under the revised plan, Ten and Bath will have until the end of 2025 to reach stock price targets.
Some executive compensation experts have defended the changes made by Robinhood. A modified share award program could be a better way for Robinhood to get the most out of its founders in the long-term interests of its shareholders, even if it costs the company, according to compensation consultant Eric Hoffman of Farient Advisors LLC.
This is because only linking the awards to an IPO could tempt the founders to keep the company private until they could reach their stock price targets or push the stock market into an unstable valuation.
“It simply came to our notice then. “A lot of people will complain that this is a good thing,” Hoffman said.
IPO Investors Litigation
Corporate governance agreements for technology startups, including their executive compensation structures, are often scrutinized by IPO investors. Robinhood is expected to launch its IPO later this month to profit from the frenzy of amateur investors for so-called meme stocks such as GameStop Corp (GME.N), which boosted its trading revenue by four times in the first quarter. :
“The change in equity rewards on the plane is often viewed negatively by investors,” said Jonat Asayag, executive consultant at ClearBridge Compensation Group LLC.
More share rewards can be expected for founders. In late May, Robinhood approved additional shares for Tenև և Bhatt for more ambitious stock price targets ranging from $ 120 to $ 300. Prizes are valued at $ 4.7 billion for Ten and $ 2.8 billion for Bhatt.
Robinhood said in the lawsuit that Tenev և Bhatt will not be given any other share rewards until his eighth birthday when they receive a share of the shares unless there are “circumstances or changes in our business.”
Ten and Bath, who founded Robinhood in 2013, cut their annual base salary in April from $ 400,000 to $ 34,248, the average salary for US employees in 2019.
Report essay DiNapoli report in New York Additional report by Ross Kerber in Boston Edited by Greg Rumeliotis և Cynthia Osterman
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