Cruise, the autonomous vehicle subsidiary of General Motors, told staff Thursday via email that the employee share-selling program for the fourth quarter is suspended, following an incident that resulted in the robotaxi company losing its permits to operate in California. Cruise cited the need to reevaluate how to offer competitive compensation, according to sources who spoke to TechCrunch on the condition of anonymity.
Cruise has confirmed the news to TechCrunch.
The loss to employees is highly dependent on when they started and what the stock price was at that time. Some employees could be at a loss easily north of $100,000. Sources we spoke to indicated they would be losing upwards of tens of thousands of dollars.
Corporate bonuses were also moved up two months, from March to January. Some sources suggest senior leadership adjusted the corporate bonus schedule to assuage workers who have described low morale throughout its ranks.
To that point, Cruise issued a surprise company holiday for tomorrow to ostensibly boost morale among employees who have expressed disappointment in the plan. Sources also speculate that the holiday is a chance for executives to plan layoffs or operational changes.
The employee share program involves GM buying back vested equity on a quarterly basis to facilitate recurring liquidity. The shares were historically bought based on valuation, but Cruise’s valuation has changed since an October 2 incident that left a pedestrian stuck under and dragged by a Cruise robotaxi. Canceling the program, sources say, makes the shares worthless.
Cruise employees still hold shares in the company, but since these are not publicly traded they can only be sold if GM schedules a liquidity event, which has traditionally occurred every quarter. A third party evaluates and sets a valuation for the shares before there is a tender offer.
After losing its permits in California, pausing all operations (driverless and manual) across the country, and pausing production on the purpose-built Origin robotaxi, layoffs are imminent. Cruise already started last week with contract workers.
Cruise has lost more than $8 billion since 2017, including $728 million in the third quarter of 2023, according to GM financial records. Cruise closed the third quarter with $1.7 billion in cash, which should give it nine months of runway.
Source @TechCrunch
