According to an internal ByteDance email on October 12, the company has started a new round of stock option buybacks at a price of $155 per share, which is about 9% higher than the previous round of buybacks.
Jiemian News quoted individuals familiar with the matter as saying that employees who have recently left due to business adjustments can also participate in the repurchase, at prices equal to current employees.
Since 2017, ByteDance has provided employees with stock option repurchase opportunities every year to meet their liquidity needs. The last two buybacks occurred in October 2021 and April 2022 at $132 per share and $142 per share, respectively.
Within ByteDance, stock options are converted from a contract to cash through four steps: granting, vesting, exercising, and cashing out. Employees will be granted options when they join the company or choose to replace them by year-end bonuses. It takes four years for ByteDance’s options to be granted and fully attributed, with coverage rates of 15%, 25%, 25% and 35% respectively. The cash out is realized by the company’s repurchase and public selling on the open market after the company goes public.
In general, ByteDance provides two rounds of stock option repurchase opportunities each year, usually in April or October. The firm’s annual performance appraisal also occurred in April. Therefore, employees can choose to exchange year-end bonuses for options according to their own circumstances.
At the end of August, during an employee face-to-face event held within ByteDance, CFO Julie Gao said that the company currently had no specific listing plan. In the opinion of some employees, in this case, a stable stock option repurchase mechanism can help meet cash demands.
After its listing is put on hold, ByteDance will also expand the pool of reserved stock options for employees. In September of this year, ByteDance shareholders revised their employee option incentive plan, using 1% of the company’s total shares to expand the reserve stock option pool, so that employees have the opportunity to obtain more company shares.
ByteDance lowered the price of its stock options to $155 per share in August to enhance the benefit space of employees. At the same time, ByteDance said it would carry out a special stock option granting programme. Employees who were given shares at a higher price than $155 will be included in the special plan. The number of employees included in this plan is around 30,000.