Robinhood Markets Inc stock trading application is giving its billionaire founders four more years to meet stock price targets that generate share premiums worth $1.4 billion.
Vladimir Tenev is a billionaire Bulgarian-American businessman who was co-founder and CEO of Robinhood, a US-based company.
The company has agreed to grant CEO Vladimir Tenev and director Baiju Bhatt 13.8 million shares, provided their share price reaches certain levels at the time of its initial public offering (IPO).
Robinhood adjusted the terms of the shares in late May so that its founders have a second chance to receive the shares if the IPO price doesn’t reach the plan’s limits.
The move could cost the Robinhood company about $569.1 million in expenses over time, according to the lawsuit. The company made the change to “maintain the incentives” of the stock award program.
Sarah Anderson, program director at the Institute for Policy Studies, whose mission is to pay executives, quoted in a publication “Since you’re already a billionaire, the more incentives you get, the better you’ll do your job.”
Under the original plan, Robinhood’s price would be at least $30.45 per share at the IPO for Tenev and Bhatt to receive some shares. Each share would have to cost $101.50 for Tenev and Bhatt to receive the $1.4 billion share award.
Robinhood has not yet released its IPO price list, but during its meetings it said that its board determined the fair value of its shares to be $16.33 at the end of December. Under the modified plan, Tenev and Bhatt will have until the end of 2025 to reach the targets.
“These goals imposed by Robinhood encourages over a long period of time to raise the share price and increase shareholder value. A lot of people would say that’s a good thing,” said Hoffmann