Spotify CFO cashes in £7.2M in shares after value surges on news of job cuts
theguardian.com
theguardian.com
It’s nothing personal. You’re a line number even if you’re some leet coder. It’s a business, and it’s a strategy game of utilizing resources. You might have 400k TC but you’re not god you’re a resource.
If you think these things aren’t fair or suck, then you should try to move out of the leet coder path and get on the capital owner or business operator side.
Sorry but it’s kind of annoying to see people making 200k plus not get this.
I realized being right is not the most important thing in the world, certainly not more important than being employed. The other lesson was to never involve myself in office politics again: it is irrelevant and ultimately lowers your standing in an organization.
How does one get away in life being disprespetful to ppl you interact with. I don't get it.
Yea I think the real lesson here is 1. treat people with respect even when you vehemently disagree and 2. You were really bad at office politics. The entire name of the game in politics is to piss off the least number of people possible.
You could also try to improve society.
People don’t have to just take it, they can fight back. All power comes from the consent of the masses, none of these guys have the physical power to compel any of us to do anything at all, including let them live.
Look what is happening to Tesla in Scandinavia right now for an entirely different take on what people can do if they don’t think things are fair.
Go start a business with your friends who think same way. See if you can build a business that can take care of its employees and do something good.
You could change your own life and that of your colleagues.
Never go public, and you don’t have any pressure to grow at all costs. Don’t take on debt.
Oh right. It’s literally a week of effort to do some LC and get a 400k job lol.
Compared to a monumentally larger effort to start and sustain a business, which may or may not even make it a year.
I do try to change society.
Some people like engineering and don't want to have to do an entirely different career. I would love to be treated as a human as an engineer (which is why I'm trying to leave the big companies but it's hard to find a company much better)
There are positions where you can just stay put engineering all day but entails being an irreplaceable resource to your employer - so only few generally can get to this niche.
It's nothing personal. I'm sure your company is great and you truly believe in your mission beyond just providing value to shareholders but humans like stability and to be treated like people. You might be a Fortune 500 but you're not god just a job.
If you think these things aren't fair or suck, you should try treating people better or else deal with the organized labor that will make decisions for you.
Sorry, it's getting kind of annoying to see employers not getting this.
The hackers of the early days were tinkerers. Odd ones out, often. They are still out there, but absolutely not taking the traditional path.
All you have to do is look at the org chart to understand that HR is a function within finance, and everything within finance is about numbers, resources (including human resources).
HR and Finance people think about data and make decisions in spreadsheets. No emotion. They also realize they'll be rewarded (via stock market, or investors) by doing things that are best for their business (according to their spreadsheets..), even if it might create a temporary PR issue or temporary morale issue.
Or… unionize. Y’know, hack the corporation.
But it does sound like his opinion on the cut downs is different than the market.
It's about being able to predict what happens in the future that matters, unless you're supposing that he would have bought immediately before the announcement and sold after.
Its the C-suite management that makes all the decisions and reaps all the rewards, but when they make mistakes, they don't fire themselves, they fire employees, many who had no control of the strategic mis-steps of their leadership.
Sometimes the C-suite needs to be fired.
Firing people when their bets don't pan out just leads to a risk averse culture that dooms any company to failure
The important thing to evaluating someone's decision making ability is to look at the decision they made with the information they had. Was it a good bet to dramatically overhire? I don't know!, but analysts can and should (rather, have no excuse not to). It's possible to determine what information the C-suite had access to and how risky they believed the decision to be. Did they play fast and loose with peoples' livelihoods for a tiny chance of unsustainable profit? Might be a bad decision.
/s
I'm just describing what good decision making actually is. If you take an option with 20% chance of success, but few downsides if it fails and large returns if it succeeds, that's usually a good decision. If, however, the downsides are catastrophic, that's probably a bad decision.
The situation here is that the downsides were arguably catastrophic, but completely externalized. The C-suite selfishly made bad decisions because it didn't affect them negatively. Doing so should reasonably have repercussions for them, but where's the incentive? An organization that places profit above all is intrinsically immoral and/or corrupt. This is obvious, we've just been allowing it for generations because we keep telling those who get hurt that things should probably work out on their own, eventually, or in the aggregate. And we convince people that an organization that places not being evil (not even martyring itself, just not doing horrible shit) just above profit can't exist. Would it be competitive? Maybe not, which is why regulation is actually useful - it can change the playing field so a company doesn't have to make that decision. (Of course, we already do this exact thing, but for extremely limited definitions of evil, and we also don't punish those evils very badly when they're committed.)
More seriously regarding this decision in particular- I think there is an interesting and not straight forward question about whether companies should hire and fire freely, allowing for high employment at times as well as layoffs and low employment at other times (as well as risk taking), or should they be more careful and therefore have less employment when money is flowing freely and fewer layoffs when money is tight? The answer seems to be somewhere on a continuum, but different folks find a different point optimal. It seems there are successful societies built on policies promoting different answers as well.
I can't default to faulting an individual for simply making a different decision than I might have preferred they make. I don't even know how much the Spotify CFO was involved in making these decisions in this case, maybe a lot, maybe a little, maybe they were against it but were over-ruled.
That’s the problem with free markets. It’s just a description of how people answer resource allocation questions.
We still have to agree on and enforce our value system.
Layoffs can be devastating to the people that were terminated; a job loss is one of the higher stress events one can experience. If you take into account the larger impact than "shareholder value" then dumping stock to capture value is an abdication of responsibility on the CEO for over -hiring, and has terrible optics of financial gain right when a number of employees took it on the chin.
As opposed to the 'benefit' that was done while they were granted income?
I'm unsure what your point is. Is a business never supposed to 'harm' its employees? They're never allowed to fire people? What is the logical conclusion of your statement? A business ought to be liable to keep their employees employed forever even if it means the business becomes unprofitable and eventually has to declare bankruptcy, resulting in the firing of all employees? Who prevents the harm then? Or is this where the magical thinking that government will make it all better using the taxes from the other companies and employees that have yet to go bankrupt despite being unable to fire anyone ever?
Right now, when a company lays people off, the town, state, and federal government are the ones who have to end up picking up the downstream effects of that in the macro sense. And local businesses, families, loved ones have to pick them up in the micro sense. This trade doesn't actually make sense if you think about it, a company _should not_ be able to cause that level of a disruption, without a penalty to itself.
This is why I actually don't mind some specifics of European companies, where firing people is _genuinely really hard_. This also means that when hiring, you simply have to plan better. It is okay to expect a large company to "plan better" than an individual with a single income stream. It is okay to push the burden of the pain of bad markets onto companies, rather than individuals.
If the existing unemployment _insurance_ (forced payroll contributions to each State) are not sufficient, then change that insurance system.
There could be a business opportunity for supplemental market-priced contributions which pay on job loss. That wouldn't be worse than the 'legal assist' ripoff plans HR pimps at employee hiring.
> then change that insurance system.
Also, more about this, why? We have a ton of levers and controls we can utilize here. Why does it need to be that the insurance system needs to change? That seems like we're closing off a lot of levers _just because_
Private job loss insurance exists already, its not an non-addressed potential market.
One knock on effect is that the job market for anyone that isn't a new grad is tough and extremely hostile. Having been laid off or fired carries such a stigma because it is a rare thing that most people don't encounter. If you're past your 30s and laid off? Good luck landing a new gig anywhere near the level you were at before. This can devastate many families in ways unimaginable to many Americans.
Another secondary effect is that workplace politics become dominant. Many incompetent workers that should've been fired long time ago are allowed to linger on, gaining seniority and accumulating more power. This translates into a workplace where your value isn't tied to the work you output, but which "line" you stand behind.
There is no panacea. Pick your poison.
I’m glad we’ve avoided this in the US /s.
Sarcasm aside, a lot of those problems exist here. Has anyone worked in a large company had a different experience in this regard?
This is not exactly a circuit breaker, but combined with other employment law this means laying off many people is quite a lot harder and takes longer.
German source with the thresholds: https://www.arbeitsagentur.de/unternehmen/personalfragen/pfl...
They consume more than they can individually produce and feel an entitlement to have this lifestyle perpetually maintained.
When an employee quits for a new job, that's a speed bump for the employer; when the employer lays someone off, that's life changing for the employee. Employees have many fewer protections than do corporations so layoffs should be done with caution and the cost of layoffs should absolutely be shared with leadership.
> In reality, being laid off is a return to stasis.
Not even close, my dude. Being laid off starts a timer for when that person's finances run out. If that person is, let's say, badly burned out from a months-long crunch period then good luck getting a job. Being laid off is deeply disruptive; if you don't believe me then try it out for yourself sometime.
And going back to the original discussion of the CEO getting a payout as a result of layoffs, that represents leadership financially benefiting at the expensive of the laid off employees. Layoffs indicate a failure of leadership to grow and plan accordingly and leadership should be sharing in the pain rather than cashing in.
Productive, healthy societies survive and thrive when members of that society can afford to take risks can tolerate shocks, and aren't destroyed when they're unable to work. Systems like social security allow elderly people to retire which frees up other productive workers to have careers rather than be caretakers. Systems like unemployment benefits give people time to reorient after a layoff and search for a career where they can be more productive rather than having to reach for the first job that they can find.
These systems are paid for by redistributing income, either temporally with things like employment taxes, or along the income spectrum via progressive taxes. The case of a CEO financially benefiting from layoffs is the exact opposite of this pattern - extracting stock gains from the financial deprivation of employees.
I'm not arguing that we should redistribute all income and it shouldn't be possible to get rich, but I am arguing that we should, shall we say, have a little fucking empathy for people that have been disadvantaged and attempt to support them rather than celebrating the active progression of income inequality.
Edit: typo fixes and a minor clarification.
Moreover, the U.S. government provides ample protections for companies, allowing them to restructure, refinance, or ironically even declare bankruptcy (a process I don't think you understand based on your comment) in an orderly manner to either save the business or ensure that creditors and employees are treated as fairly as possible in the event of a closure.
The implication that government intervention is 'magical thinking' is a misrepresentation. Government policies are not about preventing all harm but about providing a safety net that cushions the blow for individuals while allowing the economy to remain flexible and resilient. This dual approach helps maintain a stable economic environment where businesses can make tough decisions without causing undue distress to employees. I think it's a very easy argument to make that the lack of regulation in the realm of employment has made our economy quite unstable so that a small number of people can extract more wealth.
The logical extension of the argument for employee protection is not to make businesses unviable but to ensure that the economic system is equitable and that the inevitable pains of market fluctuations are not borne disproportionately by the workforce. Capitalism, supported by thoughtful government regulation, provides a framework where both businesses and employees have rights and protections, allowing for a balanced and fair economic landscape.
I believe it was implied in the comment I replied to. The focus on 'harm' would imply that they believe any harm should be minimized if not eliminated outright.
> However, there is a vast difference between making strategic adjustments and engaging in practices that unduly harm employees for the sake of short-term financial gains.
What evidence do you have to make this claim in the context of Spotify? Are you suggesting that because the CFO sold his stock, therefore the layoffs only occurred specifically with short-term financial gains in mind?
> bankruptcy (a process I don't think you understand based on your comment)
We both know what I'm talking about, details of exactly how bankruptcy affects employees, creditors, and shareholders are unimportant. I'll stop reading your comment here, given you wanted to use the old "you're doing a straw man" and then pull this out.
I've really begun to notice that there is a large group of people who see this not as a narrative but as objective and external reality. I see it often on this topic, that capitalism (definitional arguments noted) is not just inherently good - it is in fact inherent. However it seems to increasingly apply to many people's perspectives on social and societal concepts.
I love me some internet...have since I was a kid...but one externality of being able to find and interact with people who think similarly to you is increased coalescence around different realities as realities rather than narratives or perspectives.
At present we do rely on shareholders in different parts of society to fund new ventures -- most of us are here on HN because we worked at a VC-funded startup. Shareholders should get paid out. But workers have a stake in a company, the community has a stake in a company, and society at large has some small stake in a company. We shouldn't select shareholders as the main voting party in the operations of a company when the impacts of company operations are so much wider.
For good examples of companies whose impact was much larger than the shareholders, see also: DuPont/Chemours with PFAS, the manufacturers of CFCs, oil companies, etc.
Clarifying…I meant the narratives in general, not this particular one. When your information sphere becomes narrowed, whatever narratives are within it tend to be reinforced and over time become inseparable from reality. Left and right, Russian and American, etc. it doesn’t matter it happens.
He, in fact, cannot. As a C level executive he is going to trade on a 10b5-1 schedule.
I guess they can still conveniently schedule when the layoffs are announced and make it happen right before the 10b5-1 schedule?
All the previous layoffs announcements were followed by the stock rising up.
Sure, but looking at precedent gives you info to make a good bet- the last 2 Spotify layoffs this year each caused their stock to jump.
However there is no actual evidence of this, so let's be careful about breaking out the pitchforks. This sale would have happened even if the stock tanked 50%.
The 10b5-1 schedule is referenced often by executives as an alibi against insider trading. Let's just be realistic that it likely doesn't prevent anything of the sort.
Let’s be realistic that this trade was a) always going to happen no matter the stock price, b) the CEO does not have a crystal ball, and c) there is no evidence of the CEO timing layoffs as a ploy for personal gain.
It’s easy to get caught up in conspiracies that we want to be true.
Imagine if the timing were juuuust a little different, what the headlines would be. "Spotify CEO cashes in on millions before announcing layoffs". Hmmm.
> It’s easy to get caught up in conspiracies that we want to be true.
I'm not saying there even needs to be a conspiracy for this specific case. I'm pointing out that there is nothing in the law that would stop them from taking advantage of this timing. Also that previous layoffs have resulted in a bump in share price multiple times in a row, and what do you know, it happened again. Even if it was a gamble, how can you deny that they're able to time information drops to their personal advantage? Isn't that a problem in itself?
Is it a problem? It seems unsolvable if so, unless we should ban CEOs from receiving stock compensation?
Well, you said it was "at best a gamble". I don't know how else I'm supposed to interpret that besides you saying there was "at best" a 50/50 shot of either outcome happening from the perspective of the ones that announced it. I'm going to assume this is not what you meant.
Anyway, since it's established that we're in agreement (maybe? It's not easy to figure out your point of view) that executives are generally able to know with some degree of certainty >50% that their actions will create a specific effect on their stock price. And we also can agree that it is their decision when to announce and execute these actions. It's clearly and obviously a problem that they also are aware of when the stock that they hold in large quantities will be bought and sold.
> Is it a problem? It seems unsolvable if so, unless we should ban CEOs from receiving stock compensation?
If we can agree on the previous bit, then I have no idea why we should throw up our hands and be like "well I guess this is an impossible problem to solve". It's really not. Just be more restrictive with the windows in which executives are allowed to sell. Better yet spread their entire buy/sell order over the course of the year. Or even better still, don't allow them to sell stock AT ALL until they are not in charge or aware of high level decisions at the company.
CEO pay is on average 399x their average employee(https://www.epi.org/publication/ceo-pay-in-2021/). Then, we also allow them to pump their portfolio on a whim at the expense of their employees. I would say personally I don't really care if their compensation suffers, since they've probably already 10x'd my lifetime earnings in their last year of work, and I'd happily switch places with them financially if they're so hard done by.
I feel like I'm on crazy pills.
Executives. Do. Not. Have. Windows. To. Sell. I don't know how many times I have to repeat this.
They have exact dates with exact numbers of shares on which sales will execute with exactly zero input from them. It's literally the most restrictive thing you can imagine, short of not allowing them to engage in stock sales at all.
https://www.raymondjames.com/-/media/rj/advisor-sites/sites/...
Here is what you seem to think happened: Daniel Ek fired a bunch of people during an open trading window, saw that the stock price went up, and sold a bunch of shares.
Here is what actually happened: Daniel Ek put together a schedule of specific stock sales at the beginning of 2023 that executed automatically on his behalf throughout the year. At some point during the year, he decided to fire a bunch of people.
> Better yet spread their entire buy/sell order over the course of the year.
They do. It's on a schedule. Over the course of the year.
> Or even better still, don't allow them to sell stock AT ALL until they are not in charge or aware of high level decisions at the company.
This is effectively banning equity pay for executives. Unless you think we should make C level executives somehow not in charge of high level decisions.
> CEO pay is on average 399x their average employee
An entirely different discussion.
Could be.
> Here is what you seem to think happened: Daniel Ek fired a bunch of people during an open trading window, saw that the stock price went up, and sold a bunch of shares.
Nope.
> Executives. Do. Not. Have. Windows. To. Sell. I don't know how many times I have to repeat this.
You can stop whenever? Obviously I know this. Windows are just further restrictions to add to the schedule. I'm certainly not an expert, but I dunno why the concept of combining restrictions is so hard to comprehend.
You're on your own for the rest of the misinterpretations though. I think those ones are easier if you think a little harder about it.
Like honestly. Let's say Daniel Ek's 10b5 says he will sell 10,000 shares on 1/1, 3/1, 6/1, and 9/1 of 2023.
What on earth would adding trading windows do to make that more restrictive?
You're asking for a 50mph speed limit when the car's max speed is 25. It's completely pointless and accomplishes nothing.
This is still a gamble at best. Let's not go down a conspiracy rabbit hole here.
CEOs have their trading schedules set well in advance, they do not know how the market will respond to their actions ahead of time. They can at best make an educated guess.
But the idea that he scheduled this layoff specifically for personal gain is pretty unfounded.
That's what I am saying...it's not up to him. It's up to him if he wants to lay people off right before he has a sale scheduled. But what he most definitely did not and cannot do is: lay people off, observe that the stock went up, decide to make a sale.
* At a base level this is one person profiting off misfortune he caused other people. This isn't the pro-social type of behavior I would want to be encouraged.
* Companies primary focus is on satisfying Wall Street, while avoiding too much scrutiny from DC.
Growing food and bringing it to you is one example of millions. And no it doesn’t “harm the environment” to dig a potato out of the ground every year or whatever.
This is not nihilism. This is what capitalism is by definition. Says Rob Urie:
> Economic production that produces toxic externalities like global warming, dead oceans, undrinkable water, unbreathable air, etc, depends on assigning little or no value to these. To make this very clear, Western economic ‘accounting’ places no value on these, on the most fundamental necessities of living beings, by design. As Oscar Wilde put it, a cynic is someone who knows the price of everything and the value of nothing. This is in fact a summation of Western economics; circumscription of the ‘knowable’ world by what has had a price tag put on it. The externalized costs of capitalist production are real— more real than the stuff in stores that is only ‘cheap’ because the true costs were lobbed off on people who haven’t yet fought back.
- https://www.counterpunch.org/2014/06/09/global-warming-is-ec...
Sure there are things that you can do while growing food that do harm the environment, and certainly modern agriculture could be improved.
But since we’ve found an example inconsistent with your blanket statement (which starts with “all”) it is now disproven.
There’s a lot of other examples besides one potato.
And let’s not even talk about the ludicrous idea that any change to the environment equals harm. By that definition all living things harm the environment.
It sucks if you're fired but they went to work for a publicly traded company that drove the income from streaming music to almost zero for musicians, not a charity.
I thought that as a corporate officer he kind of can't sell his shares when he feels like it?
My layperson's understanding is that people like him have to decide in advance when they're going to sell shares and tell the SEC (by filing a 10b5-1 with a preset sales schedule and cooling-off period before sales start). I thought that the most control he would get is choosing to suspend the plan (i.e. keep shares instead of selling them on the pre-decided date).
Are there other ways he can sell his shares whenever he wants? Can he borrow using them as collateral whenever he likes, for example?
These share sales were presumably executed pursuant to a 10b5-1 plan, so he did something like set up a target price ahead of time at which he would sell. It just so happened that the plan was triggered when the stock surged on news of layoffs. I don't think the optics are great there! But it's at least sort of a coincidence.
[1] https://s29.q4cdn.com/175625835/files/doc_downloads/gov-docs...
He got fired today.
completely destroying their reputation in the process
any other officer it would probably wouldn't have any effect
now if he sold a boatload of stock before a horrific earnings report... thats another story
Why bother when they'll even be defended like in this very thread?
https://www.newyorker.com/magazine/2022/11/07/was-jack-welch...
1500 lives were ruined so this guy could add some zeroes to his bank account.
(For all those commenting on 10b5 sales: note that the layoffs were timed to match the scheduled sales so that the executives could reap the windfall from the increased stock prices resulting from the layoffs. This has been a strategy for at least a decade now and is drawing increasing scrutiny because it's basically an endrun around insider trading rules.)
That is not how 10b5 works. His trades are set in advance. He made zero decisions about this trade.
Are there rules about how long you need to wait after the news goes public to sell? Otherwise, it still seems kind of unfair because you could sell 100 milliseconds later before the market can react.
Basically, if you are interested in actually understanding this, don’t look to the top comments here. Wow.
What a shit show.
https://www.theverge.com/2023/12/7/23992712/spotify-cfo-paul...
We should stop acting like this reflects a large increase in the inherent value of Spotify, it's just another speculative market. Tech is particularly bad for this.
I can also light my couch on fire to warm the living room but that doesn't mean I should. Short term jumps are fairly predictable if you're calling the shots. Doesn't mean that you can do them indefinitely or without cost.
Except imagine the absolute kicking morale will take as a result of this. I'm sure it was bad enough, internally, when 17% of staff were made redundant. (I'm sure their internal channels are pretty salty and uncomfortable right now.) I'm sure there was plenty of anger internally at the C-levels. PR school would tell them to keep quiet and wait for the storm to pass; _not_ look to be publicly, personally, profiting from it to the tune of many millions of dollars.
Poor morale leads to greater attrition of those your company needs to hold on to, especially at an inflection point such as this. It leads to it being harder to hire in the future (and more expensive.)
It's up to the CFO to decide if that's worth it. It may be in the short-term; but long-term it's a much tricker equation.
I've seen it swing both ways. Group psychology is weird.
A bit like in communism where people could only work in large enterprises while small business owners have been wiped out.
Instead we should have hundreds of Spotify alternatives each focused on varying genres. Competition would solve not just working conditions but also artist pay and end user pricing.