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Robinhood's founders, Baiju Bhatt, left, and Vlad Tenev
Courtesy RobinhoodRobinhood Markets ‘ committee of directors chopped the basal salaries of its 2 founders Vlad Tenev and Baiju Bhatt to $34,248 from $400,000 successful April, the median wage of a U.S. idiosyncratic arsenic of 2019. On the 1 hand, the determination fits with the company’s everyman image. But the 2 men are improbable to miss the other $366,000. The Robinhood (HOOD) IPO connected Thursday made them worthy $2.5 cardinal each, with much imaginable gains from banal awards ahead.
At the company’s $38 opening price, Robinhood has a $32 cardinal valuation. Shares were anemic successful aboriginal trading, and Robinhood’s unique method of issuing a precocious measurement of shares to retail traders whitethorn adhd to its volatility. If the terms falls beneath $30, the founders’ stakes would beryllium worthy little than $2 billion.
Tenev, the 34-year-old CEO, and Bhatt, the 36-year-old main originative officer, some ain 7.9% of the company’s shares arsenic of the nationalist offering, according to the company’s prospectus. The institution has 3 classes of shares, and the 2 men clasp people B shares, which person 10 times the voting powerfulness of A shares. Because of their people B holdings, Bhatt has 39% of the voting power and Tenev has 26.2%, meaning they person afloat power of the company’s absorption if they ballot together.
In 2020, Tenev received full compensation of $767,000, including the $400,000 basal wage and different costs, including an enforcement aesculapian program and $343,000 for idiosyncratic information services. The institution besides gave Bhatt an enforcement aesculapian program and paid $472,000 for his idiosyncratic information services.
The crushed the committee lowered the basal wage of the 2 founders is to displacement their compensation adjacent much to equity awards. Based connected the offering price, the founders were besides eligible for different 2.77 cardinal shares worthy astir $105 million, due to the fact that of a restricted banal grant granted successful 2019.
But the truly large payouts could travel successful the future, arsenic agelong arsenic the company’s stock terms rises. In May, the committee approved a program that pays retired much shares based connected the banal price. It kicks successful astatine a stock terms of $120 and maxes retired astatine $300. Tenev would get 22.2 cardinal shares if it gets to $300, oregon a full payout worthy astatine slightest $6.7 cardinal astatine those levels. Bhatt would get 13.3 cardinal shares, oregon $4 billion, if the terms gets to $300. If it doesn’t get to astatine slightest $120, nary of those awards volition beryllium available, however.
Write to Avi Salzman astatine avi.salzman@barrons.com
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