Robinhood CEO and co-founder Vlad Tenev will have a paper fortune of over $2.5 billion when the company starts trading, according to an SEC filing. But his real payday will be in the years after, when he could earn another $4.7 billion in stock compensation.
Robinhood is seeking a market value of up to $35 billion in its upcoming initial public offering, with a share price of between $38 to $42 a share. The offering marks the public coronation of the controversial investing platform that made “democratizing finance for all” its mission. Yet Robinhood’s millions of small investors have also created huge fortunes for its founders.
Tenev, 34, and co-founder Baiju Bhatt, 36, will each sell shares worth about $50 million in the offering, according to the SEC filing on Monday. After the offering, they will each own about 8% of the company’s stock, and together they will own about two-thirds of the voting shares.
Based on the estimate of $38 to $42 a share, Tenev and Bhatt will have each stock worth stock worth between $2.5 billion and $2.8 billion after the offering.
Tenev and Bhatt could earn billions more in the coming years thanks to a generous compensation package. In May, Robinhood’s board approved an incentive plan that would award Tenev up to 22.2 million restricted stock units over the next eight years if the stock hits certain targets. Bhatt would receive 13.2 million shares under the plan.
If Robinhood stock hits the stock targets — which start at $120 and rise to $300 — Tenev would get stock valued at about $4.7 billion. Bhatt’s shares would be worth about $2.8 billion.
Their giant liquidity event comes eight years after Tenev and Bhatt — who met as physics students at Stanford in 2005 — founded Robinhood with the aim of attracting small, retail investors. Starting with an invitation-only business model, Robinhood has exploded, with 22.5 million funded accounts as of the new filing.
Yet Tenev is also personally embroiled in company’s broader controversies. The SEC filing states that Tenev has received “requests for information and in some cases subpoenas” stemming from the sweeping investigations into the company’s trading restrictions in early 2021. In January, Robinhood restricted the purchase of GameStop, AMC and other “meme” stocks due to what it said was a lack of liquidity to comply with trading regulations.
The restrictions led to a wave of class-action lawsuits and criticism from many of its traders. According to the SEC filing, a search warrant was executed by the U.S. Attorney’s Office to “obtain Mr. Tenev’s cell phone.”
The company states in the filing that, “We are cooperating with these investigations and examinations,” and that, “Due to the very preliminary nature of all of these proceedings, we are unable at this time to estimate the likelihood or magnitude of any possible losses related to these matters.”
Robinhood is a five-time CNBC Disruptor 50 company that topped this year’s list.
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Source: Business - cnbc.com
