Sarah Kunst, managing director at Creo Capital, talks about Reddit’s unusual IPO and Encyclopedia Britannica seeking a $1 billion IPO valuation on Making Money.
Reddit CEO Steve Huffman The $193 million fee was mentioned amid backlash from volunteer moderators on the social media platform as the company nears its initial public offering.
Mr. Huffman answered a question. reddit user It asked how the company reached the conclusion that his compensation package was reasonable. This question was asked by some of the social media platform’s unpaid moderators, despite being volunteers, given the importance of the site hosting forums for users to share, discuss and vote on content. This arose after he expressed dissatisfaction with his compensation package.
“I’m glad to be able to ask this question because there’s been a lot of commentary on this topic,” Huffman said in a question-and-answer video on the platform. “My compensation structure is that I have a salary and equity. The board evaluates my performance and sets my compensation.”
“The board thinks of my stock ownership as a percentage of the company. So I’m the founder of Reddit, but I sold my stock a long time ago, got rehired, and have to earn money again. “Currently, I own approximately 3.2% of Reddit, but there are opportunities to increase my ownership,” he explained.
Reddit’s IPO is 5x oversubscribed: Report
Reddit CEO Steve Huffman answered a user’s question about the company’s $193 million compensation plan. (Greg Doherty/Variety via Getty Images/Getty Images)
“So why does it appear that I received a large grant at the end of 2023? It’s because the board canceled and then re-granted most of my outstanding grants,” Huffman said. . “They did this to simplify things for both the company and me and to align my performance with the company’s performance.”
He further stated that the vesting schedule for the equity portion of his compensation has been staggered, with some portion expected to vest upon company formation. Upcoming IPOMeanwhile, other parts of his equity compensation vest at regularly set intervals over time or are linked to increases in the company’s valuation.
“Some stocks vest at the IPO, some vest over time, and some have no value until the company increases in value. If the company isn’t doing well, then I’m not doing well,” Huffman said.
Reddit aims for $6.5 billion valuation in long-awaited IPO
The Reddit platform had an average of 73.1 million daily active “uniques” (users who use the platform once a day) over the past three months of 2023, according to regulatory filings. (Sheldon Cooper/SOPA Image/LightRocket, Getty Images/Getty Images)
Pointed out on Reddit Regulatory filing It said the company’s “approach to content management inherently exposes it to a number of risks” in connection with the IPO. Among these risks: Reddit “may not be able to retain a sufficient number of volunteer moderators or to ensure that moderators fairly and consistently enforce the rules, either of which could lead to an “It has the potential to significantly degrade Redditors’ community experience.”
The company plans to set aside 8% of the total shares offered through the upcoming IPO for eligible users and moderators on the platform as an incentive to members of the Reddit community.of Stock hold Certain board members, family members and friends of employees and directors may also participate.
Reddit CEO Steve Huffman said the compensation plan approved by the company’s board of directors aligns his performance with the company’s. (Greg Doherty/Variety via Getty Images/Getty Images)
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Reddit plans to price its IPO as follows new york The company has a target price range of $31 to $34 per share, valuing it at approximately $6.5 billion. The company plans to raise up to $748 million by selling about 22 million shares.
Reuters reported, citing sources familiar with the matter, that Reddit’s IPO is oversubscribed by four to five times.
FOX Business’ Breck Dumas and Reuters contributed to this report.
