Staff at Revolut, the $5.5bn digital bank, have voiced their frustration over the company’s handling of its share option scheme – which allows employees to buy discounted shares in the future without paying tax.
Employees have faced delays getting the share options due to them, and have had little visibility of the options they’ve earned since late 2019, according to people familiar with the matter. Some have taken to internal Slack channels to complain.
This comes at an awkward time because, during the height of the UK lockdown in April, Revolut sought to cut costs by offering staff the chance to swap part of their salary for share options on a two for one basis, meaning £1 of salary could be exchanged for £2 in share options.
It is not clear exactly how many staff took Revolut up on this scheme, but it appears to have added to the frustrations of employees who have been left in the dark over the state of their holdings for the better part of this year.
Revolut puts the delays down to a protracted back and forth with HM Revenue and Customs, the UK taxman, over how it values shares in the business.
“For Revolut, having our employees share in the success of our business is really important,” said a company spokesman. “We want all our people to be rewarded for the hard work that makes our success possible. That’s why we place a high value on all our people having the opportunity to become shareholders.”
The fintech firm took in $500m from investors in February and topped up that round with an additional $80m in July – both at a valuation of $5.5bn.
Before any further share options could be granted to staff, the company had to report these investments to HMRC so that the government body could make its own assessment of the value of the business.
But the Covid-19 pandemic caused significant delays to this process, according to a person close to the situation.
The pandemic also affected financial projections that had been included by Revolut in an earlier report for HMRC, which had to be updated.
Revolut finally filed its report with HMRC in July and heard back from the taxman on 23 September, according to the person.
An HMRC spokesperson said: “Due to taxpayer confidentiality, we’re unable to comment on an indefinable business.”
Part of the appeal of working for a highly valued tech start-up is the chance to own a piece of it, and to profit from any future sale or stock market flotation.
Revolut held a town hall meeting on Friday afternoon to update staff on HMRC’s valuation and what it means for them.
Revolut has used a Company Share Option Plan to grant share options to staff. Under such arrangements, employees must be able to acquire shares at a price no lower than the market value of the shares on the date the option was granted, according to an explainer by BDO, the accountancy firm. Options can be exercised without incurring income tax, subject to certain conditions.
At Friday afternoon’s meeting, staff were told they have a 10-year window in which to exercise their options, even if they leave the company, according to the person close to the situation.
They were also told that anyone who had left Revolut before the missing options were granted will still receive their options and that these would vest on a pro-rata basis up to the date they left the company.
But some staff remain confused over the value of their share options and the impact of the changes, according to one person familiar with the matter.