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Cruise, the autonomous vehicle subsidiary of General Motors, told staff via email on Thursday that the employee stock sales program for the fourth quarter was suspended, following an incident that resulted in the loss by the robotaxi company of its operating permits in California. Cruise discussed the need to reevaluate how to offer competitive compensation, according to sources who spoke to TechCrunch on condition of anonymity.
Cruise confirmed the news to TechCrunch.
The loss to employees depends heavily on when they started and the stock price at that time. Some employees could easily lose more than $100,000. Sources we spoke with indicated they would lose more than tens of thousands of dollars.
Company bonuses were also increased by two months, from March to January. Some sources suggest that senior management adjusted the company’s bonus scale to appease workers who described low morale in their ranks.
At this point, Cruise announced a surprise holiday for tomorrow to boost morale among employees who have expressed disappointment with the plan. Sources also speculate that the holidays are an opportunity for executives to plan layoffs or operational changes.
The employee stock ownership program involves GM repurchasing vested shares on a quarterly basis to facilitate recurring liquidity. Stocks were historically bought based on valuation, but Cruise’s valuation has changed since an Oct. 2 incident that left a pedestrian trapped and dragged by a Cruise robotaxi. According to some sources, canceling the program renders the shares worthless.
Cruise employees still own shares of the company, but because they are not publicly traded, they can only be sold if GM schedules a liquidity event, which traditionally happens every quarter. A third party evaluates and sets a valuation of the shares before there is a tender offer.
After losing its permits in California, suspending all operations (driverless and manual) across the country, and halting production of the specially designed Origin robotaxi, layoffs are imminent. The 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 autonomy.
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