With its shares down about three quarters and a new home outside the S&P 500, The Trade Desk wants shareholders to reset underwater staff options so its people do not walk.
The Trade Desk is asking shareholders to let it reprice millions of employee stock options, because its falling share price has made them worthless and it fears staff will leave. The ad tech company, which dropped out of the S&P 500 this week, has called a special meeting for 19 October to vote on resetting options covering up to 15.6 million shares, according to its proxy filing.
The options were granted between 2017 and this month, with exercise prices ranging from $3.69 to $122.59. With the shares at $14.49 on the record date, most of them are underwater, meaning employees would pay more to buy the stock than it is worth. If shareholders approve, any eligible option priced above the closing price on the day of the meeting will be cut to that price. Around 2,342 current employees hold eligible options, and non-employee directors are excluded.
The board’s reasoning is blunt. It says that “adverse changes in the market price of our Class A common stock since the Eligible Options were granted could substantially harm our efforts to retain the service of the holders”, as Adweek reported. Chief executive Jeff Green holds options over about 1.6 million of the eligible shares.
The Trade Desk was one of the great stock market stories of the last decade, the independent demand-side platform that let agencies and brands buy ads across the open internet without going through Google or Meta. The shares have fallen about three quarters from their 52-week high of $56.39. Second-quarter revenue grew only 3 per cent to $715.1m, and the company has guided to third-quarter revenue of at least $650m, below the $739.4m of a year ago. On Monday it moved from the S&P 500 to the S&P SmallCap 600.
Repricing options is what companies do when the talent is worth more than the stock, and it is rarely popular with investors who bought at the top. For the ad industry the bigger story is what the slide says about the open web. The Trade Desk’s pitch was always that it was the neutral alternative to the walled gardens. Amazon’s own buying platform, retail media networks and now fast food chains like McDonald’s selling their own ad space are all taking money that used to flow through independent platforms.
It has not been a good week for the company on this side of the Atlantic either, with the ASA banning one of its LinkedIn ads under the junk food rules. For how the buying the company built its business on actually works, see our programmatic advertising explainer.
He plans, buys and reviews advertising for a living, and helps score campaigns on the site against the same five Crown Score criteria alongside other authors and contributors.
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