The aerospace company of American billionaire Jeff Bezos has introduced a new equity incentive plan for employees.
Blue Origin has unveiled a new stock plan for employees in an attempt to end staff discontent and make incentives more competitive compared to rival SpaceX, according to the Financial Times, citing three people familiar with the matter.
The stock options under the previous program had begun to expire this year without generating payments for workers, the British financial daily emphasizes.
The aerospace company’s move comes as Blue Origin pursues ambitious launch goals this year (between eight and twelve) for its New Glenn rocket, one of the largest commercial rockets in the world, second only to SpaceX’s Starship. Last month, New Glenn completed its third launch successfully recovering the previously used first stage. However, the space company’s first commercial mission failed due to the payload not being placed into orbit. So much so that the FAA grounded the rocket.
Meanwhile, Blue Origin is still competing with SpaceX to build a lunar landing module as part of NASA’s Artemis program.
Furthermore, as the FT points out, the timing coincides with SpaceX’s preparations for a June IPO, with an expected valuation of around $1.75 trillion. Unlike Blue Origin, the aerospace company of the other American super billionaire, Elon Musk, has raised numerous funds and allowed employees to sell part of their shares at a considerable profit.
All the details.
NEW STOCK OPTION PLAN FOR BLUE ORIGIN EMPLOYEES
Last week Blue Origin outlined a new incentive plan to employees, following widespread protests against the previous stock option system. According to three people familiar with the matter, the options under the old plan began to expire this year without any payments to employees.
The new plan expands the list of “liquidity events” that would allow for payment. The stock options granted to employees are cashed out in cash, without granting ownership shares in the company.
The new plan aims to address some of these issues and sets a new exercise price for the options at $9.50 per share, according to the Financial Times.
“We are acting intentionally to create liquidity events that give you the opportunity to convert these vested stock options into realized value,” Blue Origin stated to employees during an internal briefing on the plan.
DISCONTENT AMONG EMPLOYEES
More than half a dozen current and former employees, including senior executives, told the British financial daily they were upset that Blue Origin was letting the options from the original plan expire, which only provided payments in the event of an IPO or sale of the company.
“We all had a great passion for space travel, but morale collapsed when our friends at SpaceX started buying their second homes,” a former Blue Origin employee told the FT. “Jeff will have to open his wallet,” said a current employee of the company.
JEFF BEZOS’S AMBITIONS
According to people familiar with the facts, Bezos is trying to reconcile the desire to avoid external investments with the need to offer competitive incentives to employees, in a sector where SpaceX has extensively used equity programs to attract and retain staff.
The former Amazon giant founder and founder in 2000 of Blue Origin is currently the sole shareholder of the company and its main source of funding. To financially support the company, Bezos has largely used the sale of Amazon shares, of which he owns nearly 9%, according to filed documents.
FINANCIAL OUTLOOK AND LIQUIDITY HYPOTHESIS
As already mentioned, the previous stock option plan provided for payment only in the event of an IPO or sale of the company.
For his part, Blue Origin CEO Dave Limp told employees that a sale of the company appears unlikely and that there are no immediate plans for a public listing. According to two people familiar with the matter, the manager indicated the possibility of a buyout offer financed by Bezos or Blue Origin itself to allow the liquidation of stock options.
According to the Financial Times, Limp also emphasized that the company has a customer portfolio considered sufficient to support the group’s financial goals. Internal documents indicate that Blue Origin aims to achieve positive gross profit margins by 2029.
