Trade Desk CEO Pulls a Dictator Move to Rescue His Underwater Options (95% Opposition Be Damned)

Nobody:

The Trade Desk: “What if we just changed the price everyone bought their stock at?”

Imagine buying a stock, watching it crap the bed 66%, and discovering the CEO has found a magical way to make shareholders whole save his own a**. 

And his executives.

And 2,300 employees.

But (most notably) not you.

“Sorry, that feature is only available with the executive subscription.”

That's quite literally what just happened at The Trade Desk, where CEO Jeff Green has successfully pushed through a plan to rescue millions of underwater employee stock options.

But surely shareholders had something to say about management rescuing its own compensation packages?

Oh, they had PLENTY to say.

About 95% of the other votes cast opposed it.

Sadly, the shareholder vote was running on North Korean software. 

According to fake news central (read: Wall Street Journal), the digital advertising company approved a sweeping repricing of 15.6 million stock options after watching its shares DAMP two-thirds this year.

Some employees and executives saw their option exercise prices slashed by as much as 85%, resetting them to just $12.26 per share.

For anyone unfamiliar with stock options, here's how this works.

Imagine your company hands you options to purchase 10,000 shares at $50.

Then the stock collapses to $13.

You're now holding the financial equivalent of a $500,000 mortgage on a house worth $130,000.

Normally, the bank would tell you to go f*** yourself continue making your payments.

But The Trade Desk decided to play mortgage forgiveness with its stock options.

Instead of accepting defeat, The Trade Desk decided to lower the purchase price on eligible options to $12.26.

And just like that, millions of previously worthless options suddenly had a pulse again.

And we're not talking about a handful of junior employees getting thrown a bone.

Green himself held 1.6 million options eligible for repricing. Four other executives held another 1.6 million, while more than 2,300 employees accounted for over 12 million.

Of course, before we give Green the Nicolás Maduro treatment, there's a legitimate business argument here.

The Trade Desk relies on stock options to retain employees, and worthless compensation isn't great for morale. Especially after announcing plans to eliminate 15% of its workforce in September.

So management attached a six-month retention requirement. Leave or exercise your repriced options before April 19, 2027, and you generally lose the discount.

But here's where things get ridiculous.

On October 19, shareholders voted 441 million to 232 million to approve the repricing.

A landslide victory!

Or so you'd think.

Except Green himself controlled 98% of the votes in favor.

Thanks to a dual-class structure giving his Class B shares 10 votes apiece, Green controlled approximately 50.2% of the company's voting power.

Meaning 95% of votes cast by everyone ELSE opposed the deal.

And if that wasn't generous enough, Green separately received SEVEN MILLION additional options in September, with a $14.97 exercise price and stock-price targets ranging from $18 to $105. Those weren't part of the October reset.

Now, option repricing isn't unheard of. VerityData counted  220 such programs since 2021, although about a third excluded senior executives.

The Trade Desk apparently found that terribly unfair.

And just to be clear, nobody's guaranteed a payday. The stock still needs to recover.

But if shares climb to $30, repriced options could generate substantial gains while ordinary shareholders who bought at $50 remain down 40%.

Anyway, does anyone have The Trade Desk's shareholder customer service number? I'd like to request a refund on my entry price.

At the time of publishing this article, Stocks.News doesn’t hold positions in companies mentioned in the article.