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ByteDance has offered to buy shares held by employees outside the US for about $171 each, in a broad extension of a buyback programme it launched in the US in March, according to internal documents seen by the Financial Times.
In a global bulletin to staff on Wednesday, ByteDance, the Chinese company that owns TikTok, said it had “received feedback that some employees would like this opportunity to meet their cash and liquidity needs”.
ByteDance last offered to buy its global employees’ shares in December for $160 each. Employee shares that vested in the first quarter of this year are worth $176, according to documents seen by the FT, meaning that ByteDance’s internal valuation may have grown since the start of the year, although this does not take into account any dilution of its shares.
Globally, employees own about 20 per cent of the company’s stock. ByteDance has approximately 100,000 employees outside the US.
The Financial Times previously reported that TikTok’s roughly 7,000 US staff, plus thousands of former employees, owed millions of dollars in taxes on shares in the company that they were unable to sell. Staff in Europe and the Asia-Pacific region have faced similar issues, according to people familiar with the matter.
Despite growing uncertainty about TikTok’s future in the US, ByteDance’s valuation has soared from $100bn in 2020 to $268bn in December 2023. Employees who were awarded shares over the past few years have expected a windfall once they cash out, but ByteDance has restricted share sales to outside investors and held only small buyback programmes in the last year.
ByteDance is also unlikely to list on public markets in the US or arrange for external investors to buy a large chunk of employee shares while the US Senate weighs a bill that could lead to a national ban on TikTok, further dampening employees’ hopes for more liquidity. The US House of Representatives has already passed the legislation, which would affect TikTok within the country unless it is sold to a non-Chinese company.
Its latest offer to buy shares at $170.81 each allows non-US employees to sell half of their vested stock units, with more to follow after a year. Share awards that employees received instead of cash bonuses become eligible for sale one year after they have vested, according to the documents.
A spokesperson for TikTok said the latest share offer had launched one month later than in the US because of the “complex tax situations” there. They said it would be the first share deal for non-US employees in the first half of 2024.
Earlier this week, ByteDance said in a statement: “We strictly adhere to the requirements of US tax laws.”
ByteDance launched a buyback programme for US workers in March, but employees have claimed the company’s formula for purchasing shares in the scheme was “arbitrary” or “unclear”. In many cases, individuals have not been able to sell enough shares to cover their tax liabilities.
Other tech start-ups have made arrangements to help staff pay tax bills on vested restricted stock units, or RSUs. Last year, payments business Stripe arranged a $6.5bn deal that allowed employees to sell the number of shares necessary to cover the tax liability on vested RSUs. Instacart, a grocery delivery start-up, carried out an IPO in part to create liquidity for employees who had been granted RSUs.
Ahead of Wednesday’s announcement, one former senior TikTok staffer who had been based in Europe said that the lack of liquidity for ByteDance’s employee shareholders was having “magnitudes of impact on people’s lives”. The person added that the buyback programme was so “cloaked in ambiguity” that managers did not know how to advise their teams.
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