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LendingClub Loan Buyers Retreat After Shakeup; U.S. Probes

bloomberg.com

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Re: LendingClub Loan Buyers Retreat After Shakeup; U.S. Probes

#12

Post by rcarrigan87 »

I've used Lending Club on both sides of the marketplace (Lender and Borrower) and I really love the platform. So much easier than dealing with banks and the rates have always been fair. It's a shame they've made these missteps, but ultimately I think they'll come out stronger.

Re: LendingClub Loan Buyers Retreat After Shakeup; U.S. Probes

#13

Post by edc117 »

"The scandal hurt LendingClub’s ability to hold onto some of its key personnel. To retain managers and attract new ones, the company said it will need to boost pay packages.

Details of some of those arrangements were disclosed Monday: Acting CEO Scott Sanborn received a grant of restricted stock valued at $5 million and his salary was increased to $500,000. Chief Financial Officer Carrie Dolan received $3.5 million of restricted stock units and her salary was increased to $400,000. Both executives also received $500,000 cash awards that will pay out in a year."

Out of curiosity, how common is this? To me this sounds like grabbing everything you can and heading for the exits before the building burns down, but I'm not familiar with the pay range for CEOs/CFOs in their location. You don't hear anything about others in the company receiving similar packages.

Re: LendingClub Loan Buyers Retreat After Shakeup; U.S. Probes

#14

Post by davidu »

edc117 wrote: post #13

"The scandal hurt LendingClub’s ability to hold onto some of its key personnel. To retain managers and attract new ones, the company said it will need to boost pay packages. Details of some of those arrangements were disclosed Monday: Acting CEO Scott Sanborn received a grant of restricted stock valued at $5 million and his salary was increased to $500,000. Chief Financial Officer Carrie Dolan received $3.5 million o…

These stock grants will vest over time. The retention bonuses pay out in a year.

A lot can be done to turn the ship around in a year. If they don't, the stock grants (depending on issue price) will be worth a lot less than originally issued, and they'll mainly have a highly taxed bonus. The grants are to prevent opportunity cost of leaving from being considered.

If they turn it around, the stock grants will be easily worth it. The company was worth $3b+ weeks ago. Now it's dipped below $1.5b. If they can fix that, that's a small price to pay.

Re: LendingClub Loan Buyers Retreat After Shakeup; U.S. Probes

#15

Post by scurvy »

davidu wrote: post #14
edc117 wrote: post #13

"The scandal hurt LendingClub’s ability to hold onto some of its key personnel. To retain managers and attract new ones, the company said it will need to boost pay packages. Details of some of those arrangements were disclosed Monday: Acting CEO Scott Sanborn received a grant of restricted stock valued at $5 million and his salary was increased to $500,000. Chief Financial Officer Carrie Dolan received $3.5 million o…

These stock grants will vest over time. The retention bonuses pay out in a year. A lot can be done to turn the ship around in a year. If they don't, the stock grants (depending on issue price) will be worth a lot less than originally issued, and they'll mainly have a highly taxed bonus. The grants are to prevent opportunity cost of leaving from being considered. If they turn it around, the stock grants will be easily…

They're stock grants not stock options. They're worth something even if the stock goes down (except to 0).

Re: LendingClub Loan Buyers Retreat After Shakeup; U.S. Probes

#16

Post by sseveran »

edc117 wrote: post #13

"The scandal hurt LendingClub’s ability to hold onto some of its key personnel. To retain managers and attract new ones, the company said it will need to boost pay packages. Details of some of those arrangements were disclosed Monday: Acting CEO Scott Sanborn received a grant of restricted stock valued at $5 million and his salary was increased to $500,000. Chief Financial Officer Carrie Dolan received $3.5 million o…

Non-officers retention doesn't have to be disclosed with the same level of granularity. You might just see stock compensation expenses rise. At a large company retention might not even show up in a meaningful way in compensation expenses.

Re: LendingClub Loan Buyers Retreat After Shakeup; U.S. Probes

#17

Post by scurvy »

guelo wrote: post #11

Does it mean that their loan rates will go up? Is it a good time to invest?

To be honest, the street smart investors will get in there soon. With all of the scrutiny, the following loan offerings will be their most by the numbers yet. At least that's how typical scandal clean ups happen.
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