TikTok owner ByteDance is allowing some US-based employees to cash out shares before an IPO.
The report from Reuters says the move is “aimed at appeasing restless employees who have been waiting for an IPO to profit from the shares they have been awarded as part of their compensation.” It also suggests that an IPO from the Chinese tech giant could be much further down the track than expected as regulatory scrutiny over TikTok and its data practices continues to simmer in the background.
ByteDance previously set a ‘liquidity event’ such as an IPO or a sale of the company as a condition for vesting. Once vested, the shares can be exchanged by employees for cash in ByteDance stock buyback programs. Employees were informed of the new policy change on Tuesday, but ByteDance has declined to comment publicly on the change. The move impacts all ByteDance U.S. employees, including more than 7,000 employed at TikTok.
“Our goal is to provide competitive rewards for our employees,” a ByteDance spokesperson told Reuters. “We announced an internal solution that will make our US-based employees eligible to participate in future share buyback programs.”
ByteDance initiated its stock buyback programs for its global employees in 2017, with the most recent round occurring in April 2023. The programs were not previously accessible to employees without fully vested stock. According to the same sources, ByteDance is planning another stock buyback program in Q3 2023. Employees own 20% of ByteDance, while founders own 20%, and global investors own the other 60%.
The TikTok social media app has more than 150 million active monthly users in America alone. But it is facing regulatory scrutiny in the form of bans, like the Montana ban it is actively fighting to keep from going into effect. Meanwhile, several branches of the U.S. military and Congress have banned the social media app on U.S. government-issued devices.